Retail Trade Decreases in Eurozone Amid Tight Monetary Policy
Retail trade in the eurozone decreased more than anticipated in August, indicating a continued cool-down in demand due to the bloc's tight monetary policy.
According to newly released data from Eurostat, the volume of retail trade in August was 1.2% lower than in July, when sales also experienced a slight decline. Economists surveyed by The Wall Street Journal had expected a month-on-month decrease of 0.6%.
On an annual basis, sales were down 2.1% in August.
The decline in total trade was primarily driven by a 3% drop in fuel sales compared to the previous month. Additionally, mail orders and internet commerce saw a steeper decline of 4.5%, while sales of food, beverages, and tobacco decreased by 1.2%.
Inflation remained elevated in August within the currency union of 20 nations. However, it has since cooled down to 4.3% in September, according to Eurostat's latest figures. This suggests that the economy is gradually returning to normalcy after experiencing a period of exceptionally high price increases for over a year.
The weaker-than-expected retail demand may provide further justification for the European Central Bank (ECB) to keep interest rates unchanged following last month's hike. This is especially true if inflation continues to ease and demand for goods and labor continues to cool.
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