Euro zone consumers cut spending on food, drinks and tobacco for the second straight month in May amid a spike of prices, according to latest estimates from the European Union statistics office Eurostat.
The drop in essential purchases came as total retail sales in the 19-country currency bloc slightly rose in May on the month, but below market expectations.
Eurostat said consumers' purchases increased by 0.2% in May month-on-month after they had tumbled by 1.4% in April.
Economists polled by Reuters had expected a 0.4% rise on the month.
Compared to last year, retail sales also grew in May by 0.2%, Eurostat said, beating market expectations of a 0.4% fall.
Consumer Trends
Despite the marginal overall increase in retail spending, sales of food, drinks and tobacco dropped on the month by 0.3%, compounding the 2.3% slump recorded in April, which was the worst fall since June 2020 when euro zone nations started to timidly reopen their economies after COVID-19 lockdowns.
However, Eurostat revised slightly upwards its preliminary estimate of the fall in April retail sales, which it initially had reckoned to be of 2.6%.
On the year, sales of food, drinks and tobacco fell by 3.6% in May, matching the fall recorded a month earlier, in line with the downwards trend which began in December.
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Inflation
The drop in purchases of essential goods coincided with the record spike in prices, with headline inflation at 8.1% in May, and estimated to have grown to 8.6% in June.
Prices of food, alcohol and tobacco are estimated by Eurostat to have risen 7.5% in May on the year, and 8.9% last month.
Euro zone consumers also cut their spending on fuel and on online shopping by 0.2% on the month in both cases.
The overall rise in retail sales was due to a 1.2% increase in non-food products, a vast category including clothing, medicines and cosmetics.
News by Reuters, edited by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.
