A 0.3% decline in retail sales volumes in the euro zone in June 2024 indicates that the hangover from last year's period of high inflation continues to linger, financial services firm ING has noted.
ING was commenting following the publication of Eurostat data that indicated that in June 2024, retail sales volumes were down 0.3% on an annual basis in the euro area. On a month-on-month basis, volumes were also down 0.3%.
Compared to June 2023, the volume of retail trade in the euro area decreased for food, drinks, tobacco, by 0.7%; increased for non-food products (except automotive fuel) by 0.3%; and increased for automotive fuel in specialised stores, by 0.3%.
Among the EU member states for which data is available, the largest annual volume sales increases were recorded in Romania (+10.2%), Luxembourg (+7.9%) and Croatia (+5.4%), while the largest decreases were seen in Belgium (-7.3%), Estonia (-4.1%) and Austria (-3.9%).
'Postponed The Retail Recovery'
Commenting on the data, Bert Colijn, senior economist, Eurozone, ING, said that the figures indicate that consumers have "postponed the retail recovery once more".
He noted that the retail sector has "not moved in line with the economic cycle for years now. A long retail recession followed a post-pandemic boom, and a recovery has been expected for some time. While indeed it looks like a bottom in retail activity has been reached, volumes are just not increasing.
"The 0.3% decline in June illustrates that the consumer is taking longer to recover from the inflation shock and still maintains a preference for buying services over goods, although this preference is becoming smaller."
Economic Slowdown
While there were positive signs for the euro zone in terms of economic growth in the second quarter, concerns over a slowdown in the second half persist, Colijn added.
" Recent surveys don’t give much reason to expect a further acceleration, and a slowing from the already weak pace of recovery is possible," he said. "Much like in the US at the moment, eurozone economic data looks fine for now but gives cause for concern about the second half of the year."
