Data reveal that Eurozone retail sales fell more than predicted in June as factory gate prices continued to climb, indicating a deterioration in consumer demand that could presage a recession in the second half of the year.

Eurostat, the European Union’s statistics office, said that retail sales in the 19 eurozone countries declined 1.2 per cent month on month in June, for a 3.7 per cent year on year decline.

Reuters polled economists, who predicted flat monthly sales and a 1.7 per cent annual decline.

Retail sales, a barometer for consumer demand, fell in June while producer prices rose 1.1 per cent month on month for a 35.8 per cent year on year increase, according to Eurostat, indicating greater upward pressure on consumer inflation and negative pressure on demand.

While the eurozone economy grew faster than projected in the second quarter, many believe it was the final hurrah before a likely recession in the second half of the year.

They predicted that the economy will suffer as a result of rising prices, fueled mostly by high energy costs due by Russia’s invasion of Ukraine, as well as global supply chain issues.

Energy prices nearly doubled year on year in June, according to Eurostat data, but even excluding them, producer prices were 15.6 percent higher year on year in June, a surge that is sure to impair consumers’ purchasing power.

Non-food products experienced the greatest reduction in retail demand, with the exception of car gasoline, which fell 12.5 per cent year on year, according to Eurostat.

Germany, Europe’s largest economy, saw the highest loss in retail sales, down 8.8 per cent year on year, with Italy, Europe’s third largest, also down 2.8 per cent year on year. Despite this, France’s GDP increased by 0.6 per cent year on year.

Retail sales in the Netherlands fell 6.1 per cent year on year, 4.8 per cent in Austria, 8.8 per cent in Ireland, and 4.5 per cent in Finland.

(Adapted from Reuters.com)

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