Eurozone retail sales fall in March

According to Eurostat, the European Union’s statistics office, the volume of retail trade eased 0.4% compared to February, when it increased by 0.4%. Most economists had been looking for a fall of just 0.1%.

Across the wider bloc, the volume fell 0.2% in March, compared to a 0.3% increase a month earlier.

Compared to March 2021, the calendar-adjusted retail sales index rose by 0.8% in the Eurozone and by 1.7% in the EU.

Leading the month-on-month fall was a 2.9% slide in automotive fuels and a 1.2% decline in non-food products. Mail orders and internet sales were down 4.3%. The volume of retail trade for food, drinks and tobacco rose by 0.8%, however.

Among member states, retail sales fell 0.1% in Germany, the bloc’s largest economy, by 4.0% in Spain and by 1.9% in France.

The figures will further fuel concerns that the EU is facing a period of stagflation, where growth stagnates but inflation remains high.

Last week, Eurostat said Eurozone inflation had reached a record high of 7.5% in April, or 3.5% once more volatile energy and food, alcohol and tobacco prices were stripped out. GDP growth, meanwhile, slowed to just 0.2% in the three months to March end.

Michael Tran, assistant economist at Capital Economics, said March’s fall in retail sales was "consistent with consumer spending habits reverting towards their pre-pandemic norms. Moreover, the fall in fuel spending suggests that higher fuel costs are causing consumers to cut back on travel.

"The decrease in Eurozone retail sales is the first indication from official data that the war in Ukraine is weighing on consumption. With the final PMI surveys pointing to price pressures intensifying and firms remaining pessimistic, we think 2022 will be a year of stagflation for the Eurozone."

Wednesday’s retail figures are the first since Russia invaded Ukraine on 24 February.