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Europeans cautiously re-started shopping in October

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Eurostat reported a 0.1% increase in retail sales in the Eurozone for October, following three months of decline.

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The volume of eurozone retail sales just climbed into positive territory and increased by 0.1% in October compared to the previous month, while retail sales in the EU rose 0.3%, according to figures released by Eurostat. 

The slight increase follows three consecutive months of decline in the eurozone and the awakening optimism may be muffled by the annual figure which suggests that retail sales decreased by 1.2% year-on-year in October 2023 in the euro area and by 0.9% in the EU.

Both the monthly and the yearly figures fell short of market expectations in the eurozone.

Consumer demand remained subdued due to high inflation and pricy borrowing costs. 

In the eurozone, sales of food, drinks, and tobacco fell by 1.1% in October compared to the previous month, sales of automotive fuel decreased by 0.8% but non-food products increased by 0.8%.

Online trade also surged by 2.2%, following two months of decline. 

Among the eurozone’s biggest economies, trade picked up by 1.1% in Germany and by 2.4% in the Netherlands, but declined by 1% in France and by 0.4% in Spain in a monthly comparison. 

What analysts expect for the next months

The latest inflation figures show a significant slowdown in the rise of consumer prices but the elevated borrowing costs and the risk that inflation could speed up again keep expectations in a limited territory.

These figures don’t suggest an imminent revival of sales, Bert Colijn, a senior economist at ING, said in his commentary. 

“A turnaround is realistic to expect, but the degree to which that is the case remains uncertain. The changing labour market could dampen the real wage recovery we’re currently experiencing. And with economic uncertainty increasing, the savings rate could trend up again.

“Overall household consumption is likely to remain under pressure, at least at the start of 2024,” Colijn added.

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