FX.co ★ Eurozone Retail Sales Rise Less Than Forecast

Eurozone retail sales experienced a slight increase in November, primarily driven by turnover in food and automotive fuel, yet the growth fell short of expectations, indicating muted household consumption at the close of 2024.

According to Eurostat data released on Thursday, retail sales in November rose by 0.1 percent compared to the previous month, following a 0.3 percent decline in October. Analysts had anticipated a 0.3 percent increase. Sales of food, beverages, and tobacco edged up by 0.1 percent, while sales of non-food items fell by 0.6 percent. Meanwhile, sales of automotive fuel in specialized stores rose by 0.8 percent compared to the prior month.

On an annual basis, retail sales growth slowed to 1.2 percent, down from 2.1 percent in October.

Within the EU, retail sales rebounded by 0.2 percent in November after a 0.1 percent dip the month before. Year-over-year growth weakened to 1.5 percent from 2.2 percent. Notably, Cyprus, Bulgaria, Denmark, and Latvia recorded the highest monthly increases in retail trade volumes, while Belgium, Germany, and Spain witnessed the most significant declines.

Andrew Kenningham, an economist at Capital Economics, predicts that household consumption across the euro area will likely expand at a moderate rate this year. He highlights that rising real incomes, ongoing employment growth, and decreasing interest rates should bolster consumption, with immigration contributing to spending increases in some countries. Nonetheless, Kenningham warned there are downside risks to the forecast, which projects average quarterly consumption growth of 0.3 percent for the year.