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Eurozone retail sales dropped unexpectedly in July after rising for two straight months, data from Eurostat showed on Friday.

Retail sales dropped 2.3 percent on a monthly basis in July, reversing a 1.8 percent rise in June. Sales were forecast to grow 0.1 percent.

Sales of ‘food, drinks, tobacco,’ decreased 0.7 percent on month and that of non-food products fell 3.5 percent. Sales of automotive fuel in specialized stores were down 1.6 percent.

On a yearly basis, retail sales growth slowed to 3.1 percent in July from 5.4 percent in June. Economists had forecast sales to climb 4.8 percent.

EU27 retail sales dropped 1.9 percent on month in July but expanded 3.8 percent from the same period last year.

The recovery in Eurozone retail sales ended in July as sales fell sharply compared to June, Michael Tran, an economist at Capital Economics, said.

“However this does not affect our view that consumption will grow strongly in Q3, not least because we think the fall in retail sales partly reflects consumers shifting their spending from goods to services,” the economist added.


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