Attention To Retail

Image source: Maksym Bondarchuk - Shutterstock

What's going on?

Data out on Monday showed that the eurozone retail sales are still pretty scanty.

What does this mean?

Economists look to retail sales as a litmus test for consumer demand in general, so the eurozone’s latest performance has them furrowing their brows hard. Mind you, the feebleness of sales is no great surprise: the bloc’s core inflation figure – which strips out volatile things like food and energy – hit a record high last month, while the central bank’s hiking at the fastest pace on record to try and calm it down. But Europe’s been on the ropes according to January’s data: retail sales rose just 0.3% from the month before – well below the 1% rise economists were expecting – which left them languishing lower than the same time last year.

Why should I care?

The bigger picture: Near miss at best.
Consumer spending is the lifeblood of the eurozone economy, so this news is pretty concerning, especially alongside reports that construction activity continued to shrink. And while some economists think the region will avoid a recession, data like this shows how fragile the recovery might be – and suggests the eurozone could have entered a period of stagnation. That means any kind of improvement could be an uphill slog, but there’s a slim ray of light at the end of the tunnel: consumer confidence hit a year’s high in the bloc last month.

Zooming out: Let them eat cake – for real.
The French government is doing its best to help, striking a deal with major supermarkets on Monday in a bid to stop inflation from emptying French pantries. The move will see retailers sell essential groceries at the cheapest possible prices – which will pinch their wallets by hundreds of millions of euros, but probably delight shoppers.

Originally posted as part of the Finimize daily email.

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