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Italian Retail Sales Fall

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Italian Retail Sales Fall

The Italian National Institute of Statistics has just published the Retail Sales Data for the month of February showing a further fall off in activity in the Eurozones third largest economy. Year on year this figure fell from -0.9% to -1.0%, the month on month number had been expected to be flat but in fact dropped back from 0% to post a loss of -0.2%.

The European Central Bank (ECB) at the same time has taken the opportunity to release an update on the money supply. In what is showing potential to be inflationary the ECB noted that the headline M3 Money supply had increased a further 1.2% on the quarter ending in March. The year on year figure however showed a fall off in the rate of growth of this key money supply metric from 1.3% to just 1.1%, markets have been disappointed as a rise to 1.4% had been expected.

The slowing pace of money circulation does not bode well for the inflationary prospects of the Eurozone. Preliminary Consumer Price Index (CPI) figures for the bloc are expected tomorrow morning and today’s low Money Supply expansion readings are setting a tone that is tempering expectations.

The ECB has finally committed to investigating the use of quantitative easing measures in order to attempt to pull the Eurozone out of the troubling inflationary nose dive that is overshadowing this economic recovery. Although the ECB doesn’t take CPI into consideration, preferring instead the HICP inflation measure due early next month, it will no doubt come under further pressure to outline it’s plans if tomorrow’s CPI’s show a further fall. The ECB has publicly stated that it does expect inflation to pick up and as such is still in wait and see mode, if tomorrow’s number misses the economists estimates of 0.8% then the waiting game will be over and the ECB will have to act.

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