{"id":63979,"date":"2026-06-30T03:08:24","date_gmt":"2026-06-30T07:08:24","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/european-markets-digest-french-inflation-cools-as-german-retail-sales-surprise-to-the-upside\/63979\/"},"modified":"2026-06-30T03:08:24","modified_gmt":"2026-06-30T07:08:24","slug":"european-markets-digest-french-inflation-cools-as-german-retail-sales-surprise-to-the-upside","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/european-markets-digest-french-inflation-cools-as-german-retail-sales-surprise-to-the-upside\/63979\/","title":{"rendered":"European Markets Digest: French Inflation Cools as German Retail Sales Surprise to the Upside"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>French inflation cooled more than expected in June<\/strong>, with the EU-harmonized CPI falling to <strong>2.0% year-on-year<\/strong>, down from <strong>2.8%<\/strong> in May and below the <strong>2.3%<\/strong> consensus estimate.<\/li>\n<li><strong>UK GDP growth for Q1 2026 was confirmed at 0.6%<\/strong>, maintaining its position as a top performer in the G7, though annual growth was revised slightly lower to <strong>0.9%<\/strong>.<\/li>\n<li><strong>German retail sales surged 1.1% month-on-month in May<\/strong>, significantly outperforming the flat growth expected by analysts and signaling a potential rebound in consumer demand.<\/li>\n<li><strong>Honda (<a href=\"\/stock\/7267\">7267<\/a>)<\/strong> revised its timeline for the full consolidation of <strong>Astemo<\/strong>, now aiming to complete the transition by the end of <strong>Q3 fiscal 2026\/27<\/strong>.<\/li>\n<li><strong>European Central Bank (ECB)<\/strong> officials are gathering for a major symposium in Sintra, with markets closely watching speakers including <strong>Philip Lane<\/strong> and <strong>Isabel Schnabel<\/strong> for hints on July policy moves.<\/li>\n<\/ul>\n<h2>French Inflation and Spending Data<\/h2>\n<p>Preliminary data from <strong>INSEE<\/strong> showed a significant deceleration in French price pressures for June. The <strong>Consumer Price Index (CPI)<\/strong> fell to <strong>1.8% year-on-year<\/strong>, down from <strong>2.4%<\/strong> in the previous month, driven largely by a sharp slowdown in energy and food price growth. This cooling trend was also reflected in the <strong>harmonized index (HICP)<\/strong>, which hit the ECB&#39;s <strong>2.0%<\/strong> target ahead of schedule.<\/p>\n<p>On the consumer front, French spending showed resilience in May, rising <strong>0.5% month-on-month<\/strong>, beating the <strong>0.3%<\/strong> estimate. This follows a contraction of <strong>0.5%<\/strong> in April, suggesting that easing inflationary pressures may be starting to support household purchasing power. However, the <strong>Producer Price Index (PPI)<\/strong> for May rose to <strong>3.0% year-on-year<\/strong>, indicating that some pipeline pressures remain.<\/p>\n<h2>UK Economic Performance and Revisions<\/h2>\n<p>The <strong>Office for National Statistics (ONS)<\/strong> confirmed that the UK economy grew by <strong>0.6%<\/strong> in the first quarter of 2026. While the quarterly figure remained stable, the annual growth rate was adjusted downward to <strong>0.9%<\/strong> from a previous estimate of <strong>1.1%<\/strong>. The <strong>services sector<\/strong> remained the primary engine of growth, expanding by <strong>0.8%<\/strong> during the period.<\/p>\n<p>The UK&#39;s <strong>current account deficit<\/strong> narrowed to <strong>\u00a322.1 billion<\/strong> in Q1, representing <strong>2.8% of GDP<\/strong>. This was a slight improvement from the upwardly revised <strong>\u00a327.2 billion<\/strong> deficit in the final quarter of 2025. Business investment also saw a positive revision, growing <strong>0.9% quarter-on-quarter<\/strong> as companies increased spending on buildings and transport equipment.<\/p>\n<h2>German and Swedish Market Updates<\/h2>\n<p>Germany provided a positive surprise with <strong>retail sales rising 1.1%<\/strong> in May, a sharp contrast to the <strong>0.0%<\/strong> forecast. On an annual basis, sales were up <strong>1.8%<\/strong>, recovering from a <strong>2.3%<\/strong> decline previously. Conversely, <strong>import prices<\/strong> continued to climb, rising <strong>6.8% year-on-year<\/strong> in May, the highest rate since late 2022, fueled by ongoing geopolitical tensions in the Middle East.<\/p>\n<p>In Sweden, <strong>retail sales<\/strong> dipped <strong>0.2%<\/strong> in May on a monthly basis but remained up a robust <strong>8.0%<\/strong> compared to the previous year. Wage data for April showed that <strong>non-manual workers<\/strong> saw a <strong>3.2%<\/strong> year-on-year increase in earnings, slightly higher than the <strong>3.0%<\/strong> recorded in March, as the labor market remains tight.<\/p>\n<h2>Corporate and Central Bank Developments<\/h2>\n<p>Honda (<a href=\"\/stock\/7267\">7267<\/a>) announced a revised schedule for making its affiliate, <strong>Astemo<\/strong>, a consolidated subsidiary. The company now expects to finalize the capital structure change by the end of <strong>December 2026 (Q3)<\/strong>, moving from its previous target of Q1. The move is part of a strategic push to strengthen its electrification and software-defined vehicle capabilities.<\/p>\n<p>The <strong>ECB Forum on Central Banking<\/strong> in Sintra, Portugal, remains the focal point for currency traders. With French inflation data coming in softer than expected, investors are looking to ECB Chief Economist <strong>Philip Lane<\/strong> and other board members for signals on whether the bank will maintain its restrictive stance or signal further rate cuts following the June move.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways French inflation cooled more than expected in June, with the EU-harmonized CPI falling to 2.0% year-on-year, down from 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