In February, euro zone retail sales dropped by 0.6% M/M, while the consensus was looking for a decline by 0.4% M/M. The yearly figure dropped to 4.0% Y/Y, the lowest outcome since the start of the series in 1996. Looking at the details, food, drink and tobacco came out flat, while non-food products dropped by 1.1% M/M. The sharper than expected decline indicates that consumers are cutting back spending after the sales period in January. In the coming months, retail sales are forecasted to remain weak as household demand is expected to remain under pressure due to rising unemployment.
The PPI data came out in line with expectations in February. On a monthly basis, producer prices dropped by 0.5% M/M, while the January outcome was downwardly revised from -0.8% M/M to -1.1% M/M. The year-on-year figure dropped sharply, from a revised -0.7% Y/Y to -1.8% Y/Y. Excluding energy, PPI dropped by 0.4% M/M led by a 0.9% M/M decline in intermediate goods and a 0.3% M/M decline in nondurables. Nevertheless, the data are rather outdated as we already received the CPI data.
