Chinese retail sales rose 3.1 percent on the year in June, slowing from an increase of 12.7 percent in May and just below the consensus forecast of 3.3 percent. Retail sales rose 8.1 percent on the year in urban areas, down from 12.7 percent previously, and rose 8.4 percent in rural areas after a previous increase of 12.8 percent. In month-over-month terms, retail sales increased 0.23 percent in June after advancing 0.42 percent in May.

Today's data were generally above expectations, resulting in an increase in the China ECDI from minus 57 to minus 16 and the ECDI-P from minus 60 to minus 3, indicating that data are underperforming market expectations to a lesser extent.

After slowing to 12.7 percent in May, year-over-year sales in June are expected to slow substantially to 3.3 percent. Last year's lockdowns have been greatly distorting sales comparisons.

Retail Sales measure goods that are sold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer. China's retail sales are reported monthly. The critical value is the change from the same month in the previous year.

Retail sales tend to have a muted impact because the Chinese economy is not heavily reliant on consumer spending. However, the government is trying to stimulate consumer spending to give the economy more balance. To this end, the government put into place a basket of stimulus measures, including government subsidies and tax breaks for home appliances and cars, to expand consumption to sustain the economic growth, which was slowed by a slump in exports amid the global economic downturn.