Retail sales were surprisingly robust at the start of the year. Following a 0.2 percent monthly fall in December, sales rose fully 1.7 percent, their best performance since last May and well above the market consensus. Unadjusted annual growth jumped from 3.6 percent to 6.2 percent.

Nominal sales continue to be boosted by rising prices but volumes also posted a solid 1.2 percent monthly gain and so more than reversed December's 0.7 percent drop. Both purchases of food (1.9 percent) and non-food (0.7 percent) recorded increases.

Having subtracted from GDP growth every quarter since the start of 2022, January's bounce in sales means that the retail sector might make a positive contribution in the current period. The ECDI (minus 8) now shows very limited underperformance in overall economic activity but the ECDI-P (19) continues to describe a real economy that is slightly stronger than expected.

Sales are expected to drop a further 0.3 percent on the month at the start of the year.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are expressed in nominal terms but volume statistics are also available. Autos are excluded. Only a very limited breakdown of subsector performance is available in the first report but much greater detail is provided in the following month's release. The Italian National Institute of Statistics (Istat) is the main producer of official statistics in Italy.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.