Italian consumers turned out in force at the start of the fourth quarter, with retail activity far exceeding expectations.

Retail sales rose by 0.4 percent in value terms in October, confounding the consensus forecast of a 0.2 percent fall. That's after a 0.4 percent decline in September, a downward revision from the originally reported 0.3 percent fall.

On an annual basis, sales increased by 0.3 percent, the 31st straight rise, after a 1.2 percent gain in September (revised upward from the initial report of a 1.3 percent decline).

Food sales accounted for much of the monthly increase, rising by 0.6 percent in value terms, while non-food sales increased by 0.2 percent.

Monthly sales were also stronger in volume terms, rising by 0.3 percent in October, although annual transactions declined by 4.0 percent.

The data suggest that the Italian economy got off to a healthy start in the fourth quarter; industrial production data released earlier on Thursday registered a smaller decline than forecast.

Private consumption is expected to rise by 1.4 percent in 2023, according to the government forecasts released on Wednesday. That's after domestic expenditure rose by 0.7 percent in the third quarter, with the Italian statistical agency noting the"contrast" with declines in other major European economies. Government statisticians see the broader economy expanding by 0.7 percent both this year and next.

The latest data leave the RPI at positive five and the RPI-P at 38, meaning that the Italian economy is outperforming expectations.

Sales are expected to fall 0.2 percent on the month after a 0.3 percent slide in September.

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.