Eurozone retail trade declined by 0.1% month-over-month in March 2025, following a downwardly revised 0.2% increase in February and underperforming market expectations for flat growth.
Eurozone retail sales fall in March
The modest contraction highlighted continued consumer caution amid lingering economic uncertainty, high borrowing costs, and the growing impact of trade tensions. Sales of non-food products slipped by 0.1% after two months of stagnation, pointing to waning discretionary spending, particularly in household goods and clothing categories. At the same time, sales of food, drinks, and tobacco also dipped 0.1%, breaking a two-month expansion streak and suggesting that even essential consumption is being impacted by tighter budgets and inflation fatigue.
In contrast, fuel sales rose by 0.4% for the second consecutive month, reflecting the effects of slightly lower energy prices and a pickup in mobility, though levels remained below pre-pandemic averages in several key member states. On a year-over-year basis, retail trade growth slowed to 1.5% in March, the weakest pace since July 2024 and below forecasts of 1.9%, further underscoring a deceleration in household demand across the bloc.
Broader structural challenges across the euro area
The softer figures reflect broader structural challenges across the euro area, where subdued wage growth in real terms, elevated interest rates, and continued fiscal consolidation in some countries have constrained consumption. Country-level data showed mixed performance: Germany and Italy posted modest declines in retail sales, while France remained flat and Spain saw a slight uptick, driven by tourism-related demand.
The March figures also come against a backdrop of rising geopolitical and trade uncertainty, with the EU’s recent response to escalating tariffs from the United States creating fresh concerns about the future cost of imported goods. As businesses anticipate supply chain disruptions and price volatility, many have begun to shift inventories and reduce forward orders, which could feed into weaker sales in the coming months.
Looking ahead, consumer sentiment remains fragile, with confidence surveys indicating hesitancy in major purchases and a growing tendency to prioritize savings over spending. Unless monetary policy begins to ease or fiscal stimulus is introduced at the national level, economists warn that consumption may continue to drag on broader economic growth well into the second half of the year.
