Retail sales rose 0.1 percent on the month in February following a marginally stronger revised flat performance in January. The increase was a little smaller than the market consensus but still large enough to put purchases at a 3-month peak. That said, the improving trend is shallow at best and positive base effects were largely responsible for lifting unadjusted annual growth from 1.0 percent to 2.4 percent, its highest print since last August.

Volumes were also up 0.1 percent versus January but this failed to offset that month's 0.2 percent drop and left a modestly declining trend. Both sales of food (0.1 percent) and non-food (0.2 percent) posted limited gains, the latter for the first time since last November.

Today's update leaves average overall volume sales in January/February 0.4 percent below their mean level in the fourth quarter. Absent revisions, March will need at least a 1.3 percent monthly rise just to hold the quarter flat suggesting that the retail sector will provide a remarkable seventh consecutive hit to real GDP growth this quarter. The data reduce the Italian RPI to minus 21 and the RPI-P to minus 20. Recent economic activity in general has fallen short of market expectations.

Sales are seen rising 0.2 percent on the month after a 0.1 percent dip in January.

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.