Insight Europe Macro Flash: With Inflation Easing Up in the Eurozone and the UK, CE Data Assesses Impact on the Consumer Landscape.

Data from Consumer Edge suggests that spend growth in discretionary categories in Europe is picking up, chiming with changes in the macroeconomic landscape. Indeed, in October, headline inflation in the eurozone softened to +2.9% from +4.3% in September.

This is the lowest rate of inflation in the eurozone in more than two years. Importantly, inflation in price-inelastic areas of demand moderated markedly: food price inflation softened to +7.4% in October from +8.8% in September, while energy prices fell by 11.2% in October. In the UK, headline inflation softened to +4.6% in October (from +6.7% in September). Combined with the recent decisions by the European Central Bank and the Bank of England to leave interest rates unchanged (the ECB ended a streak of ten consecutive rate hikes), will we see an uptick in consumer spend? 

We can assess this question by using transaction data from Consumer Edge, which allows investors to track consumer spend dynamics in France, Germany, Italy, Spain, Austria and the UK.

Europe Consumer Spend Growth by Sector

Over the past few months, y/y spend growth in discretionary categories has been largely negative in France, Germany, Italy, Spain and Austria. This chimes with the challenging macroeconomic environment. However, in October, y/y spend growth in discretionary categories such as Apparel, Accessories and Footwear and Electronics accelerated. Notably, y/y spend growth in Grocery, which has been relatively high over the past 12 months (perhaps expected given elevated food price inflation), has been trending downwards, decelerating to +5.2% in October from +12.1% in September. The changes in the macroeconomic landscape may lead to a rise in disposable income, and the divergent trends in discretionary and non-discretionary categories may persist. Investors can monitor these trends in granular fashion using transaction data from Consumer Edge.

Europe Inflation: Consumer Spend Growth by Country

Using CE transaction data, we can also break out total spend growth by country to get an indication of overall consumption trends. Total y/y spend growth in Austria, Germany, France and the UK has largely been positive through 2023. Spend growth in Italy and Spain appears to have been negative for much of 2023, though in October, both countries saw an acceleration in spend growth, with Italy now back into positive territory. The changes in the macroeconomic environment appear to be feeding through to the consumer. 

Consumer Edge is the leading provider of alternative data for consumer spending behavior, and the only provider of global revenue signals. Our data offers insights into not only in Europe but in hundreds of industries, subindustries, tickers, and symbols across the globe. If you’d like to benefit from using Transact EUR or US or other products for other industry data year-round to track trends and dynamics like these, reach out to insights@consumeredge.com.

About the Authors

Michael Gunther is the VP Head of Insights for the CEIC. Explore more of his insights here and follow him on LinkedIn.

Ruhell Amin is a Senior Insights Analyst for the CEIC. Explore more of his insights here and follow him on LinkedIn.