In the European Union and the eurozone, the Economic Sentiment index registered a decline to 106.8 points, down from 107.6 points in February, reflecting deterioration mainly in retail trade and consumer confidence.

The downturn in consumption is now the main factor behind the slowdown, according to an economic sentiment survey by IOBE.

Retail: Falling expectations and rising inventories

In retail, sales expectations deteriorated sharply, with firms reporting increased inventories, suggesting a slowdown in demand. At the European level, the decline in the relevant indicators is in double digits, with the decline exceeding 10% compared to the beginning of the year.

This development is directly linked to the deterioration of households’ purchasing power, as increased costs of energy and basic goods limit disposable incomes.

Consumer confidence: deeper pessimism

Consumer confidence is weakening further, both in the euro area and in the EU-27, with assessments of the economic situation of households and the path of the economy deteriorating. The relevant indicators are moving into negative territory, with the decline reaching 3-4 points in a month.

Unemployment concerns and inflationary pressures are adding to caution, leading to a curtailment of major purchases.