Eurozone retail sales increase in May but below expectations

Eurozone monthly retail sales rose by 0.2% in May after a sharp fall by 1.4% previous month, but missed expectations for 0.4% increase, while annualized figure showed an increase of 0.2%, compared to last year, overshooting forecasts for 0.4% drop, but fell far below previous month’s 4% rise.

Surging prices caused EU consumers to cut spending on essential goods, such as food, drinks and tobacco, which registered a monthly drop of 0.3% in May, though still well above April’s 2.3% fall, which was the biggest drop in retail sales since June 2020.

Year on year figure showed a drop of 3.6% in food, drinks and tobacco, unchanged from the previous month’s value and remaining in a downtrend which started in December.

Consumers also reduced their spending on fuel and online shopping, as inflation in the EU continues to rise and hit new record high of 8.6% in June, as the European Central Bank plans to start gradual policy tightening, but also said that their action in bringing soaring inflation under control would not give immediate results but would a long process.