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February 1st, 2012

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The economic crisis is being blamed for a 0.1 percent drop in retail sales between November and December in the run-up to Christmas.

Despite a 0.8 percent rise in the sale of clothes, and a 0.5 percent rise in the sale of other consumer items, a 1.1 percent drop in the sale of staple goods dragged the total retail sales down for the month.

Chamber of commerce Dansk Erhverv called the figures, released by Statistics Denmark, disappointing.

“The retail turnover index for December 2011 is the lowest December index since 2003,” Bo Sandberg, from Dansk Erhverv, said. “Taking the average for the year, we have to go all the way back to 2004 to find a worse year for the retail industry.”

And according to Niels Rønholt, from Jyske Bank, there is no indication that this year will be any different.

“Turnover remained flat through the second half of 2011 and that picture does not change after today’s numbers for December. A flat development is the same as a recession because normally retail sales should increase,” Rønholt said, adding that the drop in house prices over the autumn was not an optimistic sign.

“When houses become worth less people tend to save.”

Lone Kjærgaard from the bank Arbejdernes Landsbank agreed with Rønholt’s assessment.

“In 2012 we expect to see a lot of Danes choose to have their early retirement funds paid out. [due to the programme ending, ed] This might increase consumption in the short term but it’s unlikely that it will completely reverse the stagnation. This is because of uncertainty surrounding the European debt crisis and concern about the sluggish Danish growth figures.”

Las Olsen, of Danske Bank, argued that the retail index figures do not necessarily tell the whole story about the strength of consumer consumption.

“The drop in retail turnover from November to December could indicate that private consumption ended the year with a further decline. But it’s important to be aware of the fact that over the past few years, the retail turnover index has not always been a very good indicator of the health of private consumer spending as a whole. [Debit card] turnover is much more accurate and paints a different picture.”

Olsen added that according to Dankort turnover figures, private consumption rose significantly in the last few months of 2011. There were many reasons why the retail turnover does not match the Dankort turnover and with consumption as a whole he argued.

“Retail turnover does not include the sale of cars and other services such as restaurant and theatre visits and travel. In practice, a large portion of internet sales are not included in the retail index either. So if these sales of these things rise more than sales in retail in general, private consumption will be greater than the what the retails sales suggest.”