Eurozone consumers cut food spending as inflation bites - Eurostat data

Despite the marginal overall increase in retail spending, sales of food, drinks, and tobacco dropped on the month by 0.3%, compounding the 2.3% slump recorded in April, which was the worst fall since June 2020 when eurozone nations started to timidly reopen their economies after COVID-19 lockdowns. However, Eurostat revised slightly upwards its preliminary estimate of the fall in April retail sales, which it initially had reckoned to be of 2.6%.

Eurozone consumers cut spending on food, drinks, and tobacco for the second straight month in May amid a spike in prices, according to estimates from the European Union statistics office Eurostat released on Wednesday. The drop in essential purchases came as total retail sales in the 19-country currency bloc slightly rose in May on the month, but below market expectations.

Eurostat said consumers' purchases increased by 0.2% on May month-on-month after they had tumbled by 1.4% in April. Economists polled by Reuters had expected a 0.4% rise in the month.

Compared to last year, retail sales also grew in May by 0.2%, Eurostat said, beating market expectations of a 0.4% fall. Despite the marginal overall increase in retail spending, sales of food, drinks, and tobacco dropped on the month by 0.3%, compounding the 2.3% slump recorded in April, which was the worst fall since June 2020 when eurozone nations started to timidly reopen their economies after COVID-19 lockdowns.

However, Eurostat revised slightly upwards its preliminary estimate of the fall in April retail sales, which it initially had reckoned to be 2.6%. On the year, sales of food, drinks, and tobacco fell by 3.6% in May, matching the fall recorded a month earlier, in line with the downwards trend which began in December.

The drop in purchases of essential goods coincided with the record spike in prices, with headline inflation at 8.1% in May, and estimated to have grown to 8.6% in June. Prices of food, alcohol, and tobacco are estimated by Eurostat to have risen 7.5% in May of the year, and 8.9% last month.

Eurozone consumers also cut their spending on fuel and online shopping by 0.2% on the month in both cases. The overall rise in retail sales was due to a 1.2% increase in non-food products, a vast category including clothing, medicines, and cosmetics.