European retail sales declined in October as consumers struggled with an increased cost of living.
Figures released Monday (Dec. 5) by Eurostat, the statistics office of the European Union showed the volume of retail trade in the Eurozone falling by 1.8%, the largest drop this year.
Much of that decline was driven by a drop in food and tobacco sales (down 1.5%) and non-food products (down 2.1%). The only category to see an increase was automotive fuel sales, up just 0.3% for October.
Some countries were hit harder than others: retail sales fell 4.6% in Austria, and a respective 2.8% and 2.7% in Germany and France. A few countries saw their sales increase, such as Luxembourg (up 2.6%) and Portugal (an increase of 0.5%).
In an interview with the Financial Times Monday, Melanie Debono, an economist with Pantheon Macroeconomics, suggested things could get worse before they get better.
“With services spending, such as on restaurants, also likely easing — as consumers forgo outings to ensure enough funds for energy bills — and consumer confidence still depressed, we think overall household spending will fall in the fourth quarter too,” she said.
Consumer confidence has been battered on sides of the Atlantic, as PYMNTS noted last week. The November edition of our Consumer Inflation Sentiment Report showed that one-third of consumers say they are having difficulty paying their bills, while half of consumers say inflation has soured their outlook on their economic future.
These stark economic realities have impacted and — possibly even shaped — the start of this year’s holiday shopping season, with 56 million consumers saying that they had no plans to do any holiday shopping this year. As PYMNTS has reported, 7 million fewer consumers went shopping on Black Friday this year compared to 2021.
The release of the EU’s sales figures came one day after reports from the consultancy EY that banks in Europe would likely scale back lending next year, as interest rates climb, making it harder for businesses to borrow.
EY also forecast that rising energy prices, interest rates, and inflation — and a drop in household income — will lead European consumers to make fewer loan requests.
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