Eurozone Retail Sales Fall in July as Consumer Spending Softens
Key Takeaways
- •Eurozone retail trade volume fell 0.6% in July from the previous month, while retail sales across the wider EU declined 0.4%.
- •The monthly drop was led by a 1.4% fall in non-food products and a 0.8% decline in automotive fuel, partly offset by a 0.4% rise in food, drinks and tobacco.
- •Germany recorded a 3.4% monthly decline in retail sales, making it the main drag on the Eurozone figure, while Spain fell 0.9% and Italy and Poland each dropped 0.3%.
- •Compared with July 2025, Eurozone retail sales rose 0.6% and EU sales gained 1.0%, leaving annual activity slightly positive.
- •The European Central Bank is still expected to raise its policy rate by 25 basis points to 2.50% at its upcoming meeting despite the softer consumer data.
Retail sales in the Eurozone declined in July, according to data released by Eurostat, the European Union's statistics office, pointing to softer consumer demand across the currency bloc. Full report here
The volume of retail trade fell by 0.6% month-on-month in July, reversing the 0.2% increase recorded in June. Across the broader European Union, retail sales declined by 0.4%, after also rising 0.2% in the previous month.
On an annual basis, however, retail activity remained slightly positive. Compared with July 2025, Eurozone retail sales increased 0.6%, while sales across the EU rose 1.0%.
The monthly decline was driven primarily by weaker demand for non-food products, where sales dropped 1.4% in the Eurozone. Sales of automotive fuel also fell 0.8%, while spending on food, drinks and tobacco provided some support with a 0.4% increase. The pattern of falling discretionary purchases alongside steady spending on essentials is a composition often associated with households becoming more cautious about their budgets.
Germany, the Eurozone's largest economy and typically the biggest single contributor to the bloc's aggregate figures, was the main drag on the regional reading, recording a sharp 3.4% monthly decline in retail sales. Spain followed with a 0.9% decrease, while Italy and Poland both posted declines of 0.3%. In contrast, Latvia, Cyprus and Luxembourg recorded the strongest monthly gains among member states.
The data does not change anything for the European Central Bank, which is expected to hike by 25 basis points at its upcoming meeting, bringing the policy rate to 2.50%. Markets are pricing in another rate hike before the end of the year, but the central bank might signal reluctance about further tightening without a clear increase in core inflation. The upcoming meeting's communication, together with the August retail sales release and subsequent hard data on household consumption, will offer the next indications of whether July's softness was a one-month dip or the start of a broader cooling trend.
Retail sales figures are a closely watched indicator of household consumption, which is a major component of Eurozone economic growth, and the July reading adds to evidence that consumer spending momentum has cooled across the region.
