Retail sales dipped 0.1 percent on the month in January following a marginally steeper revised 0.2 percent fall in December. This made for the first back-to-back drop since August/September last year and left purchases matching a 4-month low. However, positive base effects lifted unadjusted annual growth from 0.2 percent to 1.0 percent.

Volumes were rather softer, declining 0.3 percent versus December to hit a multi-year low. Both sales of food (minus 0.4 percent) and non-food (minus 0.2 percent) posted fresh losses.

Today's update leaves overall volume sales in January 0.6 percent below their average level in the fourth quarter, warning that the retail sector could provide a remarkable seventh consecutive hit to GDP growth this quarter. It also reduces the Italian RPI to minus 18 and the RPI-P to minus 6. In other words, recent real economy and inflation data have fallen somewhat short of market expectations.

Sales are seen rising a monthly 0.2 percent after a 0.1 percent dip in December.

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.