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People walk along the Kurfurstendamm shopping boulevard, in Berlin, on Dec. 5, 2020.Fabrizio Bensch/Reuters

Euro zone retail sales recorded an unexpected drop in September as Germany, the bloc’s biggest economy, underperformed and non-food sales were also weak, data from Eurostat showed on Friday.

Retail sales, a proxy for consumer demand, in the 19 countries sharing the euro, fell 0.3 per cent month-on-month in September and were up 2.5 per cent from a year earlier, the European Union’s statistics office said.

Economists polled by Reuters had expected a 0.3 per cent monthly rise in retail sales and a 1.5 per cent year-on-year increase.

Part of the month-on-month miss, however, may be down to revisions as retail sales in August were now estimated to be up 1 per cent compared with a 0.3 per cent rise reported earlier.

With energy prices soaring, coronavirus infections rising and supply chain bottlenecks dragging on, consumers are expected to become even more cautious in the coming months, a trend already evident in PMI data that showed business growth slipping to a six-month low in October.

High petrol prices are also expected to curb household purchasing power, leaving families with less to spend on other goods.

Eurostat said car fuel sales rose 1 per cent on the month while food, drinks and tobacco sales rose 0.7 per cent. But non food sales dropped by 1.5 per cent, including a 1.4 per cent decline in Internet and mail order sales.

Germany, the euro zone’s biggest economy, recorded the largest, 2.5 per cent drop in retail sales but Finland and the Netherlands were also deep in negative territory.

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