|Month over Month||0.2%||-0.5%||-0.7%|
|Year over Year||-0.2%||0.8%|
Retail sales (ex-autos) ended 2016 with a disappointing 0.5 percent monthly decrease, their fifth drop since June, and are now at their lowest level since October 2014. Unadjusted annual growth was minus 0.2 percent. Volumes were even weaker, posting a 0.7 percent fall versus November for a 0.6 percent yearly decline.
To make matters worse, the headline decrease would have been sharper but for food where purchases dipped a relatively mild 0.2 percent. Real non-food purchases were down a sizeable 0.8 percent to leave them 1 percent below their level at the start of the year.
The December data put calendar year sales a minimal 0.1 percent above their level in 2015 and underline the ongoing lack of impetus from the household sector to the Italian economy. Indeed, quarterly growth of purchases at year-end was zero. Moreover, with recent political developments increasing the risk of early elections and unemployment still at a high 12.0 percent, the medium-term prospects are for more of the same.
Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are expressed in nominal terms but volume statistics are also available. Autos are excluded. Only a very limited breakdown of subsector performance is available in the first report but much greater detail is provided in the following month's release.
With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.