By Ed Frankl
Eurozone retail sales retreated in February, suggesting consumers were on a fragile footing ahead of the rise in inflation driven by the conflict in the Middle East.
Volumes were down 0.2% on month compared with flat growth in January, the European Union's statistics agency said Wednesday, a little weaker than the 0.1% decline expected by a consensus of economists polled by The Wall Street Journal.
The fall in February was driven by a 0.5% decline in sales of food, drinks and tobacco, though sales in automotive fuel climbed 0.7% ahead of the jump in energy prices in March caused by the closure of the Strait of Hormuz.
Germany led the declines among larger nations, with volumes falling 0.6%, while they fell 0.1% in France and were flat in Italy and Spain. Overall across the 21-nation eurozone volumes were nevertheless 1.7% higher in February than the same month of 2025.
The data covers the month preceding the first U.S.-Israeli strikes on Iran on Feb. 28 and subsequent energy-price shock. Annual inflation in the eurozone climbed to 2.5% in March, up from 1.9% in February. Investors have since raised bets on European Central Bank rate hikes, and now expect at least two this year, according to LSEG data.
Oil prices fell on Wednesday morning on news of a two-week cease-fire. However, February's decline in retail sales will be exacerbated in the coming months as consumers are still hit with the inflation shock, Pantheon Macroeconomics' Ankita Amajuri said in a note.
"We expect retail sales to underperform for a few more months as households see a decline in their real incomes," she said.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
04-08-26 0652ET
