Euro zone sales hit by high fuel prices
Retail sales in the euro zone barely rose in August as motorists cut back spending on fuel during the normally busy driving months of the European summer, worried about the economy's slide towards recession.
High oil prices forced consumers in the 17-nation currency area to economise on diesel and gasoline, holding back retail trade which rose just 0.1 per cent in the month compared to July, the EU's statistics office Eurostat said today.
That was slightly stronger than expected by economists in a Reuters poll, who forecast volumes falling 0.1 per cent in August. The annual reading was also firmer than the consensus forecast, with sales down 1.3 per cent compared with expectations of a 2 per cent drop.
Households in the euro zone have been struggling since the global financial crisis of 2008/2009, constrained by disposable incomes that grew only during the brief recovery of 2010. That weakness has fed back into the downturn, and the bloc's output is expected to shrink at least 0.3 per cent this year.
"We are heading towards a 0.2 per cent contraction in the third quarter and a mild 0.1 per cent contraction in the fourth quarter," said Evelyn Hermann, a European economist at BNP Paribas in London.
"We expect the worst to be over next year, with less fiscal adjustment and less negative impact on demand, but a lot depends on politics. The Greek problem is not yet resolved and there's a risk that domestic demand might not pick up," she said.