Eurozone Retail Sales Decline in July Amid Softer Consumer Spending

Retail sales in the Eurozone decreased by 0.6% month-on-month in July, following a 0.2% increase in June. This decline indicates a softening in consumer demand across the region. In the broader European Union, retail sales also fell by 0.4% after a 0.2% rise in the previous month.

On an annual basis, however, retail activity showed slight growth. Compared to July 2025, Eurozone retail sales increased by 0.6%, while sales across the EU rose by 1.0%. The monthly decline was primarily driven by a 1.4% drop in non-food product sales. Additionally, sales of automotive fuel fell by 0.8%, although spending on food, drinks, and tobacco saw a modest increase of 0.4%.

Germany was a significant contributor to the regional decline, reporting a sharp 3.4% decrease in retail sales. Spain followed with a 0.9% drop, while Italy and Poland both experienced declines of 0.3%. Conversely, Latvia, Cyprus, and Luxembourg reported the strongest monthly gains.

The latest data is not expected to alter the European Central Bank's (ECB) monetary policy stance, with a 25 basis points rate hike anticipated at the upcoming meeting, raising the policy rate to 2.50%. The market is also pricing in the possibility of another rate hike before the end of the year, although the ECB may express caution regarding further tightening without a clear increase in core inflation.