Retail sales across the 21-member eurozone rose 0.1% month-on-month in August, following a 0.6% drop in July. Germany's retail market showed signs of recovery in August. Although automotive fuel sales fell under pressure from rising oil prices during the month, eurozone retail sales still managed a modest increase in August.

The European Union's statistics agency reported on Tuesday that retail sales in the 21-nation eurozone climbed 0.1% from the previous month in August, reversing a 0.6% monthly decline in July. Economists surveyed had expected a 0.3% monthly increase. Monthly sales of food, beverages and other non-fuel goods edged higher, with Germany's August retail performance showing a particularly notable rebound.

However, automotive fuel sales dropped 1.9% month-on-month, weighed down by persistent uncertainty over the conflict in the Persian Gulf and crude oil prices that rose throughout the month. Capital Economics economist Harry Chambers said in a note to clients that fuel sales are likely to decline again in September as oil prices push even higher. Brent crude climbed above $105 per barrel at times in September, driven by Houthi attacks on shipping combined with the unresolved war involving Iran.

Since April, households have gradually adapted to the energy price shock and consumer confidence has continued to recover, though it weakened slightly in September. Nevertheless, August retail sales were still 0.8% higher year-on-year. Chambers added: "Looking ahead, we expect consumption growth to remain resilient, albeit slowing from the strong 0.4% pace in the second quarter."

Pantheon Macroeconomics economist Klaus Wistesen noted in a research report that overall, the data point to a weaker retail consumption performance this quarter, with average sales in July and August roughly 0.3% below the second-quarter level. He also said: "But the good news is that this retail data understates the overall strength of consumption—car sales have been strong, and services spending has also shown resilience."