German retail sales fall more than expected in March
German retail sales fell more sharply than expected in March, signaling continued weakness in consumer spending. Higher energy costs tied to the Iran war and broader economic uncertainty are weighing on household demand across Europe's largest economy.
German retail sales contracted more sharply than expected in March, signaling persistent weakness in consumer demand. Data shows household real income remains squeezed by inflation pressures, and savings are being depleted as energy costs stay elevated due to Iran war uncertainties. Retailers have tightened inventory controls and increased discounting.
The weakness extends across the eurozone. France's first-quarter growth is expected to be flat or negative, as higher fuel prices and geopolitical tensions dent spending appetite. The ECB faces a difficult backdrop for its forthcoming policy decisions, with growth stalling and inflation pressures from energy still present.
Economists warn that eurozone consumer-facing sectors face a prolonged period of weak demand, particularly if the Middle East conflict extends further and supply chain disruptions worsen. Leading indicators suggest the weakness in retail will carry through the second quarter.
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