The struggle for the euro zone retail sales despite the increase in purchase power

Uncertainty continues to cause consumers to avoid the expenditure of goods, because retail sales in the Euro zone are about flat since September 2024. In the previous year, the soft recovery of retail expenditure had occurred, but consumer confidence had fallen since November last year – to coincide with the selection of US. The latest step is not a good sign; The consumer confidence in the Euro zone fell sharply in responding to the increasing trade war in April.

This means that consumers are sitting on the fence today, regardless of the fact that wage growth is now exceeding inflation. The growth of wages negotiated in the euro zone has tended to be above 4% since the beginning of 2023, while inflation is now down to benign levels right above 2%. This means that consumers restore lost purchasing power but have not used it to spend more in stores.

For the next months, we hope that the global economic environment will continue to frighten consumers, but simple expenditure growth can still be done, with wage growth also estimated consistently exceeding inflation.
Source: Ing