Euro zone consumers cut food spending as inflation bites

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Euro Zone Consumers Cut Food Spending As Inflation Bites Euro Zone Consumers Cut Food Spending As Inflation Bites
Prices of food, alcohol and tobacco are estimated by Eurostat to have risen 7.5% in May on the year. Photo: Dan Kitwood/Getty
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Euro zone consumers cut spending on food, drinks and tobacco for the second straight month in May amid a spike of prices, according to estimates from the European Union statistics office Eurostat.

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 per cent in May month-on-month after they had tumbled by 1.4 per cent in April.

Economists polled by Reuters had expected a 0.4 per cent rise on the month.

Compared to last year, retail sales also grew in May by 0.2 per cent, Eurostat said, beating market expectations of a 0.4 per cent fall.

Despite the marginal overall increase in retail spending, sales of food, drinks and tobacco dropped on the month by 0.3 per cent, compounding the 2.3 per cent 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.

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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 per cent.

On the year, sales of food, drinks and tobacco fell by 3.6 per cent 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 per cent in May, and estimated to have grown to 8.6 per cent in June.

Prices of food, alcohol and tobacco are estimated by Eurostat to have risen 7.5 per cent in May on the year, and 8.9 per cent last month.

Euro zone consumers also cut their spending on fuel and on online shopping by 0.2 per cent on the month in both cases.

The overall rise in retail sales was due to a 1.2 per cent increase in non-food products, a vast category including clothing, medicines and cosmetics.

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