Eurozone Retail Sales Decline

Retail sales in the eurozone unexpectedly slumped in June, indicating that high inflation and fears of a slowdown are continuing to impact consumer demand.

According to revised figures released by the European Union statistics agency, Eurostat, sales declined 0.3% in June compared to May’s 0.6% rise. Economists had expected a slight increase in sales, but the previous figure of flatlining retail sales in May had impacted their forecast.

On an annual basis, retail sales fell 1.4% in June. The decline was led by sales of food, drinks, and tobacco, which are more affected by price inflation and saw a 0.3% drop.

Retail sales for the major economies within the bloc showed a mixed picture. While German and Italian sales decreased from the previous month, sales in France, Spain, and the Netherlands experienced an uptick. Luxembourg showed the strongest rise at 2.6%, while Slovenia recorded the sharpest fall, also at 2.6%.

Inflation in the eurozone eased to 5.3% in July from 5.5% in the previous month. However, core inflation, which excludes food and energy prices, remained at the same level despite the European Central Bank’s efforts to use tighter monetary policy to reduce demand and prices.

Economists anticipate that core inflation will begin to decrease more significantly starting in autumn, but they warn that this may be too late to prevent a potential interest rate increase by the ECB in September.