* Retail sales fall 9.7 pct y/y in October
* VAT rise in September hitting already weak sentiment
(Adds details, comment)
MADRID Nov 28 Spanish retail sales fell sharply
in October as demand was hit by a rise in value-added tax that
tore into already weak consumer sentiment.
It pointed to a continued sharp economic contraction in the
fourth quarter of the year.
Official data showed retail sales fell by 9.7 percent
year-on-year on a calendar-adjusted basis in October after a
revised fall of 11.0 percent in September. The consensus
forecast for October was for a fall of 11.5 percent.
Last month was the steepest drop on record. September data
was revised down marginally from a fall of 10.9 percent, which
was the biggest fall on record.
Spain fell back into recession in the last quarter of 2011,
and the economy is not expected to grow again until late in
2013. Weak growth prospects have kept the country at the
forefront of the euro zone crisis as it battles to rein in its
public deficit despite falling revenues as a recession deepens.
The Bank of Spain on Wednesday said it expected the VAT hike
to have a negative effect on economic activity in the fourth
quarter of the year following better than expected numbers in
the third quarter.
Value-added tax rose to 21 percent, up three percentage
points, at the end of summer.
"The information available points to a continued fall in
output in the final months of 2012, when there will be a reverse
in the effect of the anticipated spending that was brought about
by the VAT hike in September," the central bank said in its
The data from the National Statistics Institute for October
marked the 28th month in a row of falling retail sales data.
Retail sales data have been hit sharply from September at
"Plummeting retail sales in both September and October
suggest the economy will pay a heavy price in the next few
quarters, with consumer spending indicators exhibiting
depression-like characteristics," said Raj Badiani, analyst at
IHS Global Insight.
(Reporting by Nigel Davies; Editing by Julien Toyer)