Eurozone retail sales up 2.4% in June as consumers increase spending

Eurozone retail sales rose at the fastest rate in seven years in June — and twice as fast as expected — thanks to strong sales of both food and non-food products, according to data published yesterday.

The volume of retail sales in the 18 countries sharing the euro surged by 2.4% compared with the same period last year, posting its strongest growth since March 2007, after a downwardly revised 0.6% rise in May, data from the EU’s statistics office Eurostat showed. Retail sales, a proxy for household demand, rose in line with expectations by 0.4% on the month in June after an upwardly revised 0.3% rise in May, the data showed.

The annual rise was driven by a 3% increase in sales of non-food products such as electronics, computers, books or textiles, followed by a 2% increase in the volume of sales of food, drinks and tobacco.

The fragile recovery of the €9.6tn economy has, so far, been mainly export- driven but Europeans, still worried about future job and economic prospects, seem to have started spending more.

The European Central Bank, which is expected to take no action on Thursday in response to a surprise drop in July inflation, saw domestic demand gradually increasing its contribution to Europe’s economic growth, which is still weak.

The bloc’s two largest economies — Germany and France — saw retail sales rise at their fastest pace since February 2011.

Analysts saw modestly improving labour markets in most countries and very low consumer price inflation providing some support to consumer spending over the coming months to help the eurozone recovery.

“Even so, July’s second successive dip in confidence reinforces suspicion that eurozone consumers are generally likely to be pretty careful in their spending for the time being,” said Howard Archer, chief European economist at IHS.

While eurozone joblessness fell in June to its lowest level since September 2012, inflation remains in the ‘danger zone’ below 1%.

— Reuters