Euro area private consumption rises significantly in Q2, Q3 2022

By contrast, consumption of non-durable goods fell for the third quarter in a row. Moreover, consumption of durable goods continued its downward trend, which began in the last quarter of 2021 until the second quarter of 2022, after which it began to improve in the third quarter that year.

The recent increase in real consumer spending in the euro area masks heterogeneous developments in individual consumption components, according to the European Central Bank (ECB). Total private consumption in the euro area increased significantly in the second and third quarters of 2022, mainly backed by consumption of services, which rose sharply.

While the recovery in total private consumption reflected several factors, including the widespread loosening of pandemic-related restrictions and the gradual easing of supply bottlenecks, the strong rise in energy prices created significant headwinds to consumption growth through its effect on households’ purchasing power, ECB said in Economic Bulletin, Issue 8/2022.

The recent sharp increase in energy prices has had a significant impact on households’ real disposable income.

Energy supply shocks have weighed considerably on real consumer spending in recent quarters, particularly on durable goods. Total private consumption was significantly affected by energy supply shocks in recent quarters. However, the individual consumption components were affected to varying degrees.

Fibre2Fashion News Desk (DS)