Euro zone consumer sales flat in May, industry prices rise

Monthly retail sales in the euro zone were flat in May after a small drop the previous month, official data released on Tuesday by Eurostat showed, in a sign of stagnant consumption in the 19-country currency area.

In a separate release, the European statistics office said monthly prices at factory gates rose by 0.8 percent in May, higher than market expectations of a 0.4 percent rise, confirming the stronger inflationary pressure in the bloc.

The volatile and often revised indicator of retail sales showed euro zone consumers spent in May the same as they did in April, when the volume of sales recorded a 0.1 percent fall on the month.

Economists polled by Reuters had forecast a 0.1 percent monthly rise in May.

Compared to a year earlier, in May retail sales were 1.4 percent higher than in April, but the increase was lower than the 1.5 percent anticipated by markets and was slower than the revised-down 1.6 percent growth in the previous month.

On a monthly basis, consumers spent more on food, drinks and tobacco, while they reduced their shopping of textiles and footwear, whose sales were down by 3.1 percent, and cut by 1.7 percent their online purchases. Purchases of fuel were unchanged on the month.

Consumers’ lacklustre appetite for shopping could partly have been caused by increased prices, with inflation rising to 1.9 percent in May in the euro zone from 1.3 percent one month earlier. Flash estimates from Eurostat showed that inflation increased further to 2.0 percent in June.

A similar trend was seen at factory gates, where prices rose 0.8 percent on the month in May after having been flat for two consecutive months. On the year, industry prices increased by 3.0 percent, above expectations of a 2.7 percent rise.

The monthly rise was mostly caused by a sharp increase in energy prices, which rose 2.6 percent after three consecutive monthly drops.

Prices increased also for intermediate and durable goods, like fridges and televisions, while they were unchanged for capital and non-durable goods.