Euro zone retail sales rose more than expected in May as a healthy showing by Germany provided a boost, data showed today, in a rare positive signal amid slowing economic growth and soaring inflation.
Retail sales, a volatile indication of consumer demand, increased 1.2 per cent month-on-month in the 15-country euro zone for an annual gain of 0.2 per cent, European Union statistics office Eurostat said.
Economists polled by Reuters had expected a 0.5 per cent monthly rise and a fall of 0.8 per cent year-on-year.
Eurostat revised down slightly its retail sales data for April to a fall of 3.0 per cent year-on-year from the 2.9 per cent drop initially reported, leaving the monthly reading unchanged at a decline of 0.6 per cent.
Economists have said repeatedly that soaring prices of energy and food were undermining consumer spending power, but the May retail trade figures showed resilience.
Sales of food, drinks and tobacco increased 0.5 per cent from April although they fell 1.4 per cent year-on-year. Non-food products gained 1.7 per cent on the month and 1.1 per cent annually.
The euro zone's monthly increase in retail trade was supported by Germany, where the figure increased by 1.3 per cent.
With the US economy slowing sharply in the wake of the subprime mortgage crisis and a strong euro hurting euro zone exports, domestic demand is seen as important in underpinning a slowing economic expansion in the single currency area.
Most recent indicators have pointed to slowing growth and the RBS/Markit Eurozone Purchasing Managers Index showed today the area's services economy slipped further into contraction than initially thought in June.
Still, the European Central Bank is widely expected to increase its main interest rate today to 4.25 per cent from 4 percent due to concerns over inflation.
Inflation hit a record high of 4 per cent year-on-year in June, more than double the ECB's target.