Euro zone retail sales flat in June, as consumers cut fuel purchases

Euro zone retail sales were stable in June compared to the previous month, as consumers reduced their purchases of fuel, the European Union's statistics office said on Wednesday.

Eurostat said retail sales, a proxy for household spending, were flat in June month-on-month, in line with market expectations, and 1.6 percent higher on a yearly basis in the 19-country currency bloc, slightly less than the expected 1.7 percent rise.

The halt in retail sales growth in June came after the year's highest monthly rise in May, when consumers spent 0.4 percent more than in the previous month.

While consumers showed an increased appetite to make discretionary expenses in June, a drop in fuel purchases kept the indicator stable.

Monthly retail sales of fuel in June recorded a 1.3 percent fall, the sharpest of 2016. "To some extent, the sluggishness in retail spending during 2Q16 may relate to the increase in energy prices," said Greg Fuzesi, economist at JPMorgan.

The soft quarter for retail sales coincided with a slowing down of the euro zone's economic growth which halved from a quarterly 0.6 percent in the first quarter to 0.3 percent in the April-June period.

In June, consumers increased by 0.3 percent their spending on non-food products, a category including textiles, computer equipment and electronic appliances, showing a growing interest in buying non-essential products, after a 0.1 percent rise in May.

Sales of drinks, food and tobacco products went up 0.1 percent in June, slowing down from the 0.6 percent increase in May.

Among the largest euro zone economies, retail sales on a monthly basis fell in Germany by 0.1 percent and in France by 0.4 percent, while rising markedly in Spain by 1.0 percent.