Eurozone Retail Sales Rise Less Than Expected

(RTTNews) - Eurozone retail sales grew less than expected at the start of the year suggesting that high inflation continued to eat into consumer spending, data from the statistical office Eurostat showed Monday.

Retail sales increased only 0.3 percent in January from December, when turnover was down 1.7 percent. Economists had forecast 1.0 percent growth.

Both food and non-food product sales rebounded in January. Food, drinks and tobacco sales climbed 1.8 percent after a 2.1 percent fall. Non-food product sales gained 0.8 percent after falling 2.5 percent.

Automotive fuel sales declined 1.5 percent reversing a 0.5 percent rise in the prior month.

The year-on-year decline in retail sales slowed to 2.3 percent in January from 2.8 percent in December. This was the slowest fall in the current four-month sequence of contraction.

January's rise in retail sales was not enough to offset December's fall and the current low levels of household confidence suggest that consumption will decline in the coming months, Capital Economics economist Jack Allen-Reynolds said.

Recent surveys suggest somewhat better economic activity in the first quarter, but given fourth-quarter weakness and surveys missing the mark recently, performance so far this year is clouded in uncertainty, ING economist Bert Colijn said. This makes it hard to assess where the economy is headed in the short term. Nonetheless, if today's release on retail sales is anything to go by, it does not look like the economy has started a rebound just yet, the economist added.

Elsewhere, survey results from the behavioral research institute Sentix today showed that investor confidence weakened in March as expectations deteriorated sharply despite receding fears of a recession. The Sentix economic index dropped to -11.1 from -8.0 in February.