Eurozone GDP: French economy in stagnation; UK shop price inflation falls – business live

Newsflash: France has avoided falling into a technical recession, after stagnating in the last half of 2023.

Statistics body INSEE has got eurozone GDP day (details here) up and running by reporting that France’s economy was stable in October-December, with growth of 0.0%.

Trade supported the French economy, while its domestic economy struggled.

INSEE explains:

Final domestic demand (excluding inventories) contributed negatively to GDP growth this quarter (‑0.1 points after +0.4 points in Q3 2023), due to the decrease of gross fixed capital formation (GFCF, ‑0.7% after +0.2%) and of household consumption (‑0.1% after +0.5%).

Conversely, foreign trade recovered in Q4 2023 and contributed positively to GDP growth (+1.2 points after ‑0.1 points). Imports fell sharply (‑3.1% after ‑0.4%), while exports remained virtually unchanged (‑0.1% after ‑0.6%).

Finally, the contribution of inventory changes to GDP growth was negative again this quarter (‑1.1 points after ‑0.3 points in Q3 2023).

France’s GDP for the third quarter of 2023 has been revised up too, to show zero growth, not the 0.1% contraction previously reported.

Over 2023 as a whole, France’s economy grew by just 0.9%, down from 2.5% growth in 2022.

Inflation across UK shops has fallen to its lowest level since May 2022, as households benefitted from a slowdown in price rises of food and other goods.

Annual shop price annual inflation eased to 2.9% in January, new data from the British Retail Consortium and NielsenIQ show. That’s down from 4.3% in December, meaning prices are still rising, but at a slower rate.

Food inflation decelerated to 6.1% in January, down from 6.7% in December, helped by a fall in the price of tea and milk, Alcohol, though, remained more expensive than a year ago due to increased duties, the BRC says.

Fresh food inflation dropped to 4.9%, down from 5.4% in December, while non-food inflation eased to just 1.3% in January, down from 3.1% in December.

This may cheer the Bank of England, which is due to set UK interest rates at noon on Thursday.

Helen Dickinson, chief executive of the British Retail Consortium, said:

“Some New Year cheer as January shop price inflation slid to its lowest level since May 2022. Non-food goods drove the fall, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand.

Good news for the morning brew as the price of tea and milk fell, while evening tipples remained more expensive on the back of increased alcohol duties.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

We get a major healthcheck on Europe’s economy this morning, as new GDP data for across the eurozone is released.

Growth figures for France, Germany, Italy, Spain, Austria and Portugal will be released over the next few hours, culminating in the first estimate of eurozone growth in the final quarter of 2023.

And it may show that the eurozone is in recession. Economists predict that GDP in the single-currency bloc shrank by 0.1% in Q4 2023. If so, that would be the second quarterly contraction in a row (GDP fell 0.1% in July-September), meeting the technical definition of a recession.

The eurozone economy has been weighed down by high interest rates, and the cost of living squeeze caused by the jump in energy and food prices after Russia’s invasion of Ukraine.

The euro weakened yesterday ahead of today’s data, as Tony Sycamore, market analyst at IG, explains:

EUR/USD is trading lower at 1.0832 (-0.18%) ahead of the EA flash GDP data, expected to show a second consecutive quarter of contraction (-0.1% exp) and confirm the Euro Area entered recession.

Also coming up today

In a busy morning for economic data, we’ll also learn if UK grocery inflation fell in the last month, and whether lenders approved more, or fewer, mortgages.

The US economy, which has been doing rather better than Europe, will also be in focus, with the latest JOLTS report into job vacancies, a consumer confidence report and a house price index.

We also get a healthcheck on the global economy, with the International Monetary Fund releasing an update to its world economic outlook this afternoon.

There will also be disruption on UK railways today, as members of the Aslef union at Southeastern, Southern/Gatwick Express, Great Northern, Thameslink and South Western Railway strike in an ongoing pay dispute.

The agenda

• 6.30am GMT: French GDP report for Q4 2023

• 8am GMT: Kantar’s latest UK grocery inflation data

• 8am GMT: Spanish GDP report for Q4 2023

• 8am GMT: Austria’s GDP report for Q4 2023

• 9am GMT: Germany’s GDP report for Q4 2023

• 9am GMT: Italy’s GDP report for Q4 2023

• 9.30am GMT: Portugal’s GDP report for Q4 2023

• 9.30am GMT: UK mortgage approvals for December

• 10am GMT: Eurozone GDP report for Q4 2023

• Noon GMT: Mexico’s GDP report for Q4 2023

• 1pm GMT: IMF to publish its January World Economic Outlook Update

• 2pm GMT: US house price index for November

• 3pm GMT: Conference Board index of US Consumer Confidence

• 3pm GMT: JOLTS survey of US job openings