6 July 2022

2 minute read

By: Global Ag Media

Euro zone consumers cut spending on food, drinks and tobacco for the second straight month in May amid a spike of prices, reported Reuters, citing 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% in May month-on-month after they had tumbled by 1.4% in April.

Economists polled by Reuters had expected a 0.4% rise on 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 euro zone 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%.

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 on the year, and 8.9% last month.

Euro zone consumers also cut their spending on fuel and on 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.