Retail sales in the eurozone barely rose in August as motorists cut back spending on fuel during the normally busy driving months of the European summer, worried about the economy's slide towards recession. High oil prices forced consumers in the 17-nation currency area to economise on diesel and gasoline, holding back retail trade which rose just 0.1 percent in the month compared to July, the EU's statistics office Eurostat said on Wednesday.
That was slightly stronger than expected by economists in a Reuters poll, who forecast volumes falling 0.1 percent in August. The annual reading was also firmer than the consensus forecast, with sales down 1.3 percent compared with expectations of a 2 percent drop.
Households in the eurozone have been struggling since the global financial crisis of 2008/2009, constrained by disposable incomes that grew only during the brief recovery of 2010. That weakness has fed back into the downturn, and the bloc's output is expected to shrink at least 0.3 percent this year.
"We are heading towards a 0.2 percent contraction in the third quarter and a mild 0.1 percent contraction in the fourth quarter," said Evelyn Hermann, a European economist at BNP Paribas in London. Meanwhile, high world oil prices driven up by tensions over Iran's nuclear ambitions have kept euro zone inflation at well above the European Central Bank's 2 percent target. As consumers cut back, the volume of automotive fuel sales fell 0.7 percent in August after falling 0.8 percent in July. With eurozone consumer confidence at a 40-month low in September and joblessness at a record 11.4 percent high in August, the European Commission warned on Monday of an "economic and social disaster" if unemployment among young Europeans continued to rise.
In a sign that the euro zone's debt crisis is now hurting the bloc's wealthiest economies, retail sales volumes fell 0.8 percent in France and showed no growth in Belgium. In Germany, whose export-fuelled economy is flagging with slowdowns in the euro zone and China and the weak recovery in the United States, sales rose just 0.3 percent. Retail trade was down 0.8 percent in Germany on an annual basis and by 1.4 percent in Belgium, while sales volumes plummeted 6 percent in bailout recipient Portugal, which is struggling through its deepest recession since the 1970s. Data was not available for Greece, where the euro debt crisis began three years ago, but the country is substantially off the targets tied to its 130 billion euro ($168 billion) rescue package and Athens looks set for another debt restructuring if it is to return to solvency.
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