Capital Economics: High Interest Rates Cast Shadow on Euro Area Retail Industry Outlook in H2

Franziska Palmas, an economist at Capital Economics, pointed out in a report that retail sales in the euro area will continue to decline in the coming months due to the impact of high interest rates.

He noted that sales throughout the second quarter were flat year-on-year, while national GDP data showed similar flat or slightly higher consumption.

Consumer sentiment looks weak as high interest rates raise the cost of debt, pointing to a decline in consumption in the second half of the year and a weaker outlook for the retail sector.