The latest EU Retail Sales YoY figure for December 2025, released on December 4, shows a 1.50% increase compared to the previous year. This reading outperformed the consensus estimate of 1.40% and improved from November’s 1.20%. The data, sourced from the Sigmanomics database, reflects a modest but meaningful rebound in consumer spending after a dip to 1.00% in October. Over the past 12 months, retail sales have averaged 1.80%, indicating some volatility but overall steady growth.

Drivers this month

• Stronger demand in durable goods (0.40 pp contribution)
• Moderate growth in non-food retail sectors (0.30 pp)
• Services-related retail sales remained flat, limiting upside

Policy pulse

The 1.50% growth remains below the pre-pandemic average of 2.50% but above the troughs seen in late 2024. The European Central Bank’s (ECB) ongoing rate hikes to combat inflation have slowed consumer credit growth, yet retail sales show resilience. Inflation remains above the ECB’s 2% target, keeping monetary policy restrictive.

Market lens

Immediate reaction: EUR/USD dipped 0.15% within the first hour post-release, reflecting cautious optimism. Short-term yields on German bunds rose 3 basis points, signaling moderate inflation concerns. The Euro STOXX 50 index showed a 0.20% gain, driven by consumer discretionary stocks.

Retail sales growth is a core macroeconomic indicator reflecting consumer spending, which accounts for roughly 55% of EU GDP. The 1.50% YoY increase signals ongoing consumer resilience despite headwinds from inflation and tighter financial conditions. Comparing this with other foundational indicators:

Inflation and wage growth

Consumer Price Index (CPI) inflation remains elevated at 3.10% YoY, down from 3.50% six months ago but still above target. Wage growth has moderated to 2.20%, limiting real income gains and constraining spending power.

Monetary policy & financial conditions

The ECB has raised rates by 125 basis points since mid-2025, pushing the main refinancing rate to 3.75%. Credit growth has slowed to 2.00% YoY from 3.50% a year ago, reflecting tighter lending standards. These conditions weigh on retail sales but have not yet triggered a sharp contraction.

Fiscal policy & government budget

Fiscal stimulus has been tapered, with EU governments focusing on budget consolidation. Public spending growth slowed to 0.80% YoY, limiting direct support to households. Energy subsidies have been reduced, increasing cost pressures on consumers.

Drivers this month

• Durable goods sales surged by 3.50% YoY, contributing 0.40 pp
• Non-food retail sectors grew 1.80%, adding 0.30 pp
• Food and beverage sales were flat, limiting overall growth

Policy pulse

The ECB’s restrictive stance is reflected in the slower growth compared to the 2.30% peaks seen in mid-2025. Retail sales remain above the 1.00% floor seen in late 2024, suggesting some consumer spending resilience despite tighter credit.

Market lens

Immediate reaction: The EUR/USD currency pair weakened slightly by 0.15%, while German 2-year bund yields rose 3 basis points, reflecting inflation concerns. Consumer discretionary stocks in the Euro STOXX 50 gained 0.20%, indicating investor confidence in retail strength.

Looking ahead, retail sales growth in the EU faces a complex mix of supportive and constraining factors. We outline three scenarios:

Bullish scenario (30% probability)

• Inflation falls rapidly below 2%, boosting real incomes
• ECB signals pause or cut in rates by mid-2026
• Consumer confidence rebounds, driving 2.50%+ retail sales growth

Base scenario (50% probability)

• Inflation gradually declines to 2.50% by late 2026
• Monetary policy remains restrictive but stable
• Retail sales grow moderately at 1.50–1.80% YoY

Bearish scenario (20% probability)

• Geopolitical shocks disrupt supply chains and energy prices
• Inflation remains sticky above 3%, forcing further ECB hikes
• Retail sales contract or stagnate below 1.00% YoY

Risks and opportunities

Upside risks include faster inflation easing and fiscal stimulus. Downside risks stem from energy price volatility, geopolitical tensions, and tighter credit conditions. Consumer sentiment and wage growth will be key to watch.

The December 2025 EU Retail Sales YoY figure of 1.50% signals moderate consumer spending growth amid a challenging macroeconomic environment. While the rebound from October’s low is encouraging, persistent inflation and restrictive monetary policy temper enthusiasm. The data suggests consumers remain cautious but adaptive, balancing cost pressures with spending needs.

Going forward, retail sales will be a critical barometer for the EU economy’s resilience. Policymakers must navigate inflation control without stifling demand. Investors should monitor retail trends alongside wage growth, inflation trajectories, and geopolitical developments to gauge the sustainability of consumer-driven growth.

Key Markets Likely to React to Retail Sales YoY

Retail sales data often influences currency pairs, equity indices, and bond markets sensitive to consumer demand and economic growth. The following five tradable symbols historically correlate with EU retail sales trends and are likely to react to this release:

• EURUSD – The primary currency pair reflecting Eurozone economic health and consumer spending strength.
• ESTX50 – Euro STOXX 50 index, sensitive to consumer discretionary sector performance.
• ADS – Adidas AG, a major European retailer, often impacted by consumer spending trends.
• BTCUSD – Bitcoin, reflecting risk sentiment shifts linked to macroeconomic data.
• GBPUSD – British Pound vs. US Dollar, often influenced by EU economic data due to trade and financial linkages.

FAQs

What is the significance of EU Retail Sales YoY?

Retail Sales YoY measures consumer spending growth, a key driver of economic activity and GDP in the EU.

How does retail sales data affect monetary policy?

Strong retail sales can signal inflationary pressures, influencing central banks like the ECB to adjust interest rates.

What are the risks to EU retail sales growth?

Risks include inflation persistence, geopolitical shocks, tighter credit, and fiscal austerity impacting consumer demand.

Takeaway: EU retail sales growth at 1.50% signals cautious consumer resilience amid inflation and monetary tightening. Monitoring this indicator is vital for anticipating economic momentum and policy shifts.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 12/4/25