Eurozone retail sales fell unexpectedly in January despite a rise in consumer confidence at the start of the year, pointing to fragility in household sentiment even before this week’s surge in energy prices.
Volumes were down 0.1% on month, compared with growth of 0.2% in December, the European Union’s statistics agency said Thursday. A consensus of economists polled by The Wall Street Journal expected a 0.3% rise.
The figure for December was revised up from a 0.5% decline.
The fall in January was driven by lower sales of nonfood products and automotive fuel. Volumes were down 0.9% in Germany, the eurozone’s largest economy, while sales rose in France, Spain and Italy.
This comes despite the bloc showing resilience to rising headwinds at the beginning of 2026. On Wednesday, data showed the eurozone unemployment rate falling to a record low in January. Consumer confidence also picked up in the month, according to figures published last week.
But looking ahead, the outlook is likely to be dragged by rising geopolitical uncertainty and energy prices following U.S. and Israeli strikes on Iran.
“This week’s increase in gas and oil prices may dent confidence a bit and lead to higher household inflation expectations,” said Andrew Kenningham, chief Europe economist at Capital Economics.
Even so, household consumption is expected to rise at a moderate pace this year, he said.
Figures also released Thursday showed the Irish economy contracted much more sharply in the final three months of last year than previously estimated. The country’s statistics agency now calculates that gross domestic product was 3.8% lower than in the third quarter, having previously seen a decline of 0.6%.
That may lead to a reduced estimate for growth in the eurozone as a whole during the period. The European Union’s statistics agency had calculated that the currency area’s economy grew by 0.3%.
While Ireland’s economy experienced a sizable contraction at the end of 2025, it recorded one of the world’s fastest expansions over the year as a whole. The Central Statistics Office said annual GDP was 12.3% higher than in 2024, having previously seen growth of 12.6%, on a surge in exports of weight-loss drugs to the U.S.
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Don Nico Forbes is a reporter for Dow Jones Newswires and The Wall Street Journal, covering European economics. He also writes features on sustainable business. Don joined Dow Jones and the Journal as a publishing editor in 2019. He holds degrees from the University of Manchester and.. https://www.wsj.com/business/retail/eurozone-retail-sales-decline-unexpectedly-f6e3b589?mod=global_news_article_pos1
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