Portugal Retail Sales MoM: December 2025 Report and Macro Outlook
Table of Contents
Portugal’s retail sales for December 2025 increased by 0.30% month-over-month (MoM), according to the latest release from the Sigmanomics database. This figure aligns precisely with market estimates but marks a slowdown from November’s 0.50% gain. Over the past year, retail sales have averaged a 0.30% monthly increase, indicating a stable yet modest expansion in consumer spending.
Drivers this month
- Consumer spending on essentials remained steady, supporting baseline growth.
- Holiday season promotions boosted discretionary purchases moderately.
- Energy price stabilization helped maintain household disposable income.
Policy pulse
The 0.30% growth sits below Portugal’s pre-pandemic average monthly retail sales growth of 0.50%, reflecting ongoing headwinds from tighter European Central Bank (ECB) monetary policy aimed at curbing inflation.
Market lens
Following the release, the EUR/GBP currency pair saw a mild appreciation of 0.10%, reflecting cautious optimism. Portuguese sovereign bond yields remained stable, while short-term interest rate futures priced in a 60% probability of a pause in ECB rate hikes in early 2026.
Retail sales are a critical barometer of domestic demand and consumer confidence in Portugal. The 0.30% MoM rise in December follows a volatile 2025, where monthly changes ranged from -0.70% in October to 0.80% in November 2024. This volatility reflects shifting macroeconomic conditions, including inflationary pressures and labor market dynamics.
Monetary Policy & Financial Conditions
The ECB’s tightening cycle, with key rates rising by 125 basis points since mid-2024, has increased borrowing costs for consumers and businesses. This has dampened credit growth and discretionary spending, contributing to the softer retail sales momentum observed in recent months.
Fiscal Policy & Government Budget
Portugal’s fiscal stance remains moderately expansionary, with targeted subsidies and tax reliefs aimed at low-income households. The government’s 2025 budget includes a 1.20% of GDP increase in social spending, which supports consumer purchasing power amid inflation averaging 3.40% YoY.
External Shocks & Geopolitical Risks
Ongoing supply chain disruptions and geopolitical tensions in Eastern Europe have pressured import prices and consumer goods availability. However, Portugal’s diversified trade links and tourism recovery have partially offset these shocks.
This chart signals a cautious stabilization in Portugal’s retail sector. While growth remains modest, the reversal of recent declines points to underlying resilience. Continued monitoring is essential as monetary policy and external risks evolve.
Market lens
Immediate reaction: EUR/USD dipped 0.20% within the first hour post-release, reflecting broader eurozone growth concerns despite steady retail sales. Portuguese equities, represented by EDP.LS, showed a 0.30% uptick, signaling investor confidence in domestic demand recovery.
Looking ahead, Portugal’s retail sales face a complex interplay of factors. Inflation is expected to moderate to 2.80% by mid-2026, which could ease pressure on consumer budgets. However, ECB policy remains restrictive, with further rate hikes possible if inflation proves persistent.
Bullish scenario (25% probability)
- Inflation falls faster than expected, boosting real incomes.
- Fiscal stimulus expands, supporting consumer spending.
- Tourism and exports accelerate, improving employment.
- Retail sales grow at 0.50%+ MoM through H1 2026.
Base scenario (50% probability)
- Inflation gradually declines to target range.
- Monetary policy stabilizes with no further hikes.
- Retail sales maintain steady 0.30% MoM growth.
- Consumer confidence remains cautious but stable.
Bearish scenario (25% probability)
- Inflation remains sticky above 3%, eroding purchasing power.
- ECB tightens further, increasing borrowing costs.
- Geopolitical shocks disrupt supply chains anew.
- Retail sales contract or stagnate in early 2026.
Policy pulse
Monetary and fiscal policies will be pivotal. The ECB’s communication signals a data-dependent approach, while Portugal’s government may adjust fiscal measures to shield vulnerable consumers.
Market lens
Financial markets will closely watch retail sales as a proxy for domestic demand. Portuguese sovereign bonds and the EURUSD pair are likely to react to surprises in retail data releases.
Portugal’s December 2025 retail sales data confirms a moderate but steady consumer sector amid a challenging macroeconomic environment. While growth has slowed from previous months, the sector shows resilience against inflationary pressures and tighter financial conditions. Policymakers face a delicate balance between containing inflation and supporting growth.
Structural trends such as digital commerce adoption and demographic shifts will shape long-run retail dynamics. The sector’s health remains a bellwether for Portugal’s broader economic trajectory in 2026.
Key Markets Likely to React to Retail Sales MoM
Retail sales data in Portugal typically influences several key markets. The Portuguese equity market, especially utilities like EDP.LS, tracks consumer demand trends closely. The EURUSD forex pair is sensitive to eurozone economic signals, including Portugal’s retail performance. Sovereign bond yields reflect fiscal and monetary policy expectations. Additionally, the cryptocurrency BTCUSD often reacts to shifts in risk sentiment linked to economic data. Lastly, the currency pair EURGBP moves in response to relative economic strength between Portugal’s main trading partners.
Retail Sales vs. EDP.LS Since 2020
Since 2020, Portugal’s retail sales growth has shown a positive correlation with the performance of EDP.LS, a leading utility stock sensitive to domestic economic activity. Periods of retail contraction, such as mid-2025, coincided with dips in EDP.LS prices, while retail rebounds supported stock gains. This relationship underscores retail sales as a proxy for broader economic health impacting corporate earnings.
FAQs
- What is the significance of Portugal’s Retail Sales MoM data?
- Retail Sales MoM data measures monthly changes in consumer spending, indicating economic momentum and consumer confidence in Portugal.
- How does retail sales growth affect Portugal’s economy?
- Stronger retail sales boost GDP growth, support employment, and influence monetary and fiscal policy decisions.
- What factors influence retail sales fluctuations in Portugal?
- Key factors include inflation, interest rates, fiscal stimulus, geopolitical risks, and consumer sentiment.
Final takeaway: Portugal’s retail sales growth remains modest but stable, reflecting a cautious consumer base navigating inflation and tighter financial conditions. The sector’s trajectory will be critical for economic resilience in 2026.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
December’s retail sales growth of 0.30% MoM compares to November’s 0.50% and the 12-month average of 0.30%. This indicates a return to trend after a brief acceleration in late 2024. The chart below illustrates the monthly fluctuations over the past year, highlighting the sharp dips in May (-0.60%) and October (-0.70%) 2025.
The retail sales index shows a pattern of recovery interrupted by periodic contractions, reflecting consumer sensitivity to inflation and monetary tightening. The recent positive print suggests some stabilization but remains below the robust growth seen in early 2025.