Confcommercio, inflation and bills "weigh" on Christmas gifts

• Confcommercio: "From price increase, risk of loss of consumption up to 5.3 billion"

• Confcommercio: "Uncertainty slows recovery, fears about taxes and prices"

• Confcommercio: autumn of unknowns for Italian families

• Confcommercio-Censis: "Uncertainty slows recovery, 20% say no to holidays"

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04 December 2021 December is confirmed as the most important month of the year for consumption (this year around 110 billion euros of total expenditure, 10 less than in 2019), but the climate of confidence of families is falling, the strong recovery of 'inflation and the rise in bills risk reducing the share of thirteenth traditionally allocated to spending on Christmas gifts which this year will be confirmed at around 160 euros per capita substantially in line with last year.

However, also considering the consumption of those who do not benefit from this emolument, i.e. the area of ​​self-employment, the overall average expenditure per family in December - including rents, bills and utilities - stood at 1,645 euros, 0.5% in more than last year, but still far below 2019 (-7.5%).

These, in summary, are the main results of the analysis by the Confcommercio Research Department on thirteenth and December consumption.

🎄 In December #consumption increased slightly but #inflation and bills "weigh" on Christmas gifts

- Confcommercio (@Confcommercio) December 4, 2021

For the month of December it is estimated a value of about 110 billion euros of consumption expenses (including rents, utilities, services, etc.), a value about 10 billion lower than what was spent in the 2019. For marketable expenses only (goods and services) i.e. food, clothing, furniture, white and brown appliances, computers, cell phones and communications, books, recreation, entertainment and culture, toys and self-care, hotels, bars and restaurants, the estimate is 76 billion. In 2020, this expenditure, strongly correlated with the economic well-being of families, had dropped to around 66 billion euros today.

From the trend in marketable consumption in the three-year period, it can be seen that the month of December, also in 2020, a year characterized by a holiday period characterized by many limitations, represented the most important period from the point of view of consumption. The estimates made for 2021 do not consider sudden deterioration of the pandemic picture. Beyond the health situation, some points of concern emerge from the economic side.

In November, household confidence, albeit at historically high levels, fell back for the second consecutive month. This situation, if confirmed in the coming months,

risks having repercussions in the early part of 2022 as well as compressing, albeit marginally, the expenses for December and for Christmas gifts.

The deterioration is largely correlated to the re-emergence of inflation which, for the unexpected part, i.e. that exceeding 1.5% -2%, could compress the purchasing power of households, reverberating mainly in a contraction in purchases. of marketable goods and services. In fact, the recovery in inflation is affecting mainly and at least for now, those goods and services that families cannot give up, that is, the so-called forced consumption.

Over the course of twelve months, there has been a shift from a context of deflation to a change in consumer prices of more than 3% (3.8% in November 2021). The new scenario has not affected the orientations and propensities of families to the point of modifying their behavior, but its continuation cannot fail to affect consumption choices. The estimate of the thirteenth in the last month of the year is based on the

national accounting data periodically released by Istat and by those of the various INPS pension schemes.

According to the metric adopted, starting from the gross wages of employees and the gross pension benefits of private and public employees and subtracting the contribution and tax levy for employees (about 12.3 billion euros) and tax only for retirees (about 5 , 3 billion euros), the total amount of the net thirteenths is around 43.8 billion euros.

Between employees (about 19.3 million) and pensioners (just over 16 million) the number of beneficiaries on the whole is close to 35.4 million, which is equivalent, if the professional position is assumed as a condition of the reference person (the figure of the householder in common parlance), to approximately 19.5 million households receiving this additional wages.

From the net amount of 2021, the 43.8 billion in table 1, once the provisions to meet the December deadlines linked to the Imu-Tasi balance and the car ownership tax have been subtracted, an additional corresponding amount must be deducted the propensity to save, which stood at 12.7% on average for the current year. This is still a very high percentage, albeit lower than that of 2020, forced to reach, due to the restrictions of the lockdown in terms of

freedom of movement and the blocking of most of the economic activities of the services, the almost record level of 15. , 6%, considering that to find a figure higher than about one point, it is necessary to go back to 1997.

Families, therefore, also in 2021 maintain an attitude inspired by prudence regarding purchase intentions, as a consequence of the prolongation of the emergency induced by the

Sars-Cov-2

pandemic

. At the end of the accounting steps described above, we arrive at the amount of the thirteenth destined for consumption, 32.6 billion. The nominal increase in bill costs

would be worth 4.5 billion euros for all Italian families. Considering public support of € 1.9 billion for families and around € 1.1 billion for businesses, the net additional cost for employees and retirees would be equal to € 1.97 billion plus € 310 million

of higher burdens for self-employed families.

Finally, it must be considered that for the recurrence of the Christmas holidays, it is reasonable to assume that even self-employed workers (entrepreneurs, freelancers and self-employed workers), while not benefiting from the thirteenth, allocate a share of income to Christmas purchases, which we estimate for 2021 around € 6.8 billion, from which the higher net charges deriving from the costs of energy bills must be deducted. Therefore, by calculating the average expenditure per family in December for a number of families which, in addition to employees and retirees, include the approximately 3.1 million of those who have an independent worker as a reference person, and evaluating it at prices constants of 2021, we arrive at an average consumption expenditure in December deriving from only the thirteenth, actual and theoretical, of 1,645 euros,up by 0.5% compared to 2020, but still 7.5% lower than in 2019 (compared to two years ago, 134 euros would still be missing at constant prices per family).

The modest positive change is compressed by the net additional cost of bills which, despite the important public support, would weigh in total around 2.3 billion

euros for the families of employees, retirees and the self-employed. Considering overall the normal expenses, the compulsory ones and the expenses incurred by the thirteenth monthly salaries, the volume of consumption will also grow in the final part of the year, although not yet reaching pre-crisis levels. In short, the question of consumption still does not seem to be resolved and without a perfect realization of the investments of the NRP and the reform process, recovery is at risk.

According to a survey carried out by Format for Confcommercio, this year for Christmas gifts 158 euros will be spent per capita compared to 164 last year, -8% compared to

2019 and over 36% less than in 2009: a total of 6 , 9 billion compared to 7.4 billion last year. The results confirm the current climate of uncertainty due to the persistence of

pandemic and generalized price increases. One of the most striking - but perfectly logical - financial effects of the pandemic was that of considerably increasing the amount of household liquid assets, that is, the total currency (banknotes and coins) and financial assets that can play the role of intermediary. payment, i.e. current account deposits (bank and post office), also called sight deposits.

During 2020, on demand savings as defined above went from just under € 1,020 billion in the fourth quarter of 2019 to over € 1,120 billion in the fourth quarter of 2020, an increase of around € 100 billion. A race, however, that did not stop in 2021, even with the start and the excellent progression of the vaccination campaign that made it possible to keep the evolution of the pandemic under control. In fact, in the first six months of the current year, liquid assets held by households increased by a further 40 billion euros, reaching 1,160 billion euros, suggesting a sort of hysteresis of "forced" savings, now justified for voluntary reasons, probably related to uncertainty that still persists with respect to the end of

the emergency situation.

Only the propensity to save, which throughout 2020 and up to the first quarter of 2021 followed the growing trend of liquid assets held by households, in the second quarter of the

current

year

denotes a decline, returning to around 13%, but still well below. above the historically observed values ​​until the onset of the pandemic. The first part of 2021 nevertheless saw a clear recovery in household consumption, also due to an expected recovery compared to the

difficult months of the lockdown and the first two waves, with a trend higher than that of disposable income. This explains in trivially arithmetic terms the reduction in the level of the propensity to save in the second quarter of the current year compared to the peaks of 2020.

It goes without saying that unexpected inflation - the part exceeding 1.5-2% - would lead in the short term to a reduction in the purchasing power of this mass of liquidity not protected by price increases, with inevitable repercussions on consumption. and, therefore, on the recovery in progress. It is estimated that a last quarter with consumer prices on average growing by 3.4% could record a reduction

in household spending of about 3.8% compared to a scenario with inflation at 2%, with a third of this reduction. attributable to the loss of purchasing power of liquid wealth.

The year that is about to end should show a very sustained trend in real GDP compared to the vertical drop of 2020 (+ 6.2%). In the background, however, there are still clear risks

of a recovery in inflation. For this reason, our growth forecast for 2022 stands at + 4.0%, below seven tenths of a point compared to the estimates of the Government's planning framework in Nadef 2021. The lower growth would be entirely due to a less dynamic profile of household spending.

"The growth in consumption at Christmas risks being held back by fears of the pandemic, inflation and forced consumption costs. To revive confidence, the expected cut in prices must be accelerated.

taxes, starting with personal income tax and contributions to be paid by businesses. "Thus the President of Confcommercio, Carlo Sangalli, comments with a note on the analysis of the Confederation's Research Office.

The #Sangalli president on #consumi di #Christmas: "Accelerating the tax cut to boost confidence" pic.twitter.com/WATpu4d8vg

- Confcommercio (@Confcommercio) December 4, 2021