SPANISH SPEND LESS THIS CHRISTMAS

MADRID
SPANISH shoppers will spend less this Christmas as they cope with higher mortgages and food prices and worry about the depth of an economic turndown, a poll showed this week. “Everything's gone up -- especially mortgages but the Madrid transport pass is also going to go up -- and so you have to make cuts somewhere”, said Houda Missioui, a 32-year-old mother of two, as she shopped in department store El Corte Ingles.

The Federation for Independent Consumers (FUCI) says shoppers will spend an average 866 euros over the festive period, compared to the average monthly salary of 2'000 euros, which, with inflation at 4 percent, is a real fall of 3 percent. “Consumers will trim spending on presents to compensate for the rise in food prices”, said Agustina Laguna, FUCI Chairman.
Interest rates on Spanish mortgages are based on the Euribor rate which has reached a 7-year high of 4.8 pct adding hundreds of euros to the average Spaniard's monthly mortgage bill.

Retailers and analysts will be watching Christmas retail sales for early warning signs of slowing spending by consumers, who provide 55 percent of Spanish gross domestic product.

Eager shoppers, many of whom have seen their homes triple in value over the last decade, have helped Spain's economy outperform the rest of the euro zone for years. But the property boom is fizzling out, and households are feeling the burden of debt worth 130 percent of annual disposable income.

The survey of 5'000 Spanish consumers aged 30-65 found 251 euros of a shopper's budget is earmarked for extra food for the festive period, more than a year ago as food prices have risen.

A total of 245 euros and 232 euros will be spent on presents and leisure, less than in 2006, said FUCI.
Lottery spending remains the same, with 138 euros going on tickets like the famous Gordo, “The Fat One”, which was drawn yesterday. “In general the worse the economy is going, the more people spend on lottery tickets hoping they can sort their situation out that way,“ said Salvador Santos Campano, Chairman of Madrid's Chamber of Commerce.

Agriculture Secretary Josep Puxeu has appealed to commercial distributors and producers to contain prices after reports families could pay 30 percent more for their Christmas menu.

Puxeu even suggested switching to eating rabbit rather than traditional Christmas fare like roast lamb, piglet and seafood. “I won't change my Christmas menu”, said 61-year-old housewife Teresa Montejano, shopping in a Madrid branch of Spanish department store El Corte Ingles. “I don't like rabbit.” Slowing spending is considered one of the largest risks to retailers like Inditex Spain's largest, which makes clothing brands Zara and Massimo Dutti and logs around 40 percent of sales in its home country
Other companies -- telecoms firms and smaller food companies -- will also suffer if Spaniards tighten their belts or lose their jobs if the economy slows.

British retailer Burberry has already said it is expanding into other markets like the U.S. and elsewhere in Europe to reduce its exposure to a downturn in Spain, which is its second-largest market and contributes close to a fifth of sales.

Madrid's Chamber of Commerce believes this year's festive spending is likely to fall from last year with December's sales up 35 percent from the average month in the rest of the year compared to a usual 40 percent increase.

However, Fortis analyst Francisco Ruiz said jitters fuelled by the government's comments on Christmas spending could be reining in shoppers this year and those spending patterns may not necessarily carry on into the new year.

Government retail data for October showed strong growth in clothing, continuing the vigorous trend of the last few months, and earlier this month Inditex reported nine-month net profit above analyst predictions at 825 million euros. “We will have to wait to see the final data but the change to more autumn and winter weather in Spain in the last couple of weeks will be helpful”, Ruiz said.

However, those who are spending are opting for hich-tech gifts in the Balearics.
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