Euro area: Probing upside risks to 2Q26 consumption

Research evidence excerpt

Euro area: Probing upside risks to 2Q26 consumption

J P M O R G A N Europe Economic Research

10 July 2026

Euro area: Probing upside risks to

2Q26 consumption

Our expectation was that a near-5%ar jump in consumer prices in 2Q would lead Economic and Policy Research

to weakness in consumer spending last quarter. That said, consumer data has been Mariana Monteiro

firmer than we had anticipated and we have already revised our forecast for (44 20) 3493-5147

household spending from -0.5%ar to 0.25%ar a few weeks ago. Hard data released mariana.reispaivamonteiro@jpmorgan.com

this week have corroborated our view, leaving our household spending nowcast J.P. Morgan Securities plc

largely unchanged, tracking a 0.1% to 0.5%ar, with risks skewed to the upper end

of the range. This, in our view, reflects decent resilience among consumers and

keeps our forecast for a cyclical lift from here on track.

The constellation of consumer spending nevertheless raises interesting questions.

April-May retail sales is 0.8%ar above 1Q and 2Q26 new passenger car

registrations are tracking a 12%ar increase, according to country-level data

available so far. Combining these two pieces of data, we are tracking a 1%ar gain

in goods spending.

Tracking services spending is harder and relies heavily on surveys — these are

consistent with a 1% contraction that would offset most of the increase in goods

spending. With higher fuel prices and very high temperatures, households may

have substituted away from out-of-home activity in 2Q. This aligns with

developments seen in the retail data: fuel sales were down about 12%ar in April–

May versus 1Q, while food retail sales were up around 4%ar. These are large shifts

relative to recent history and may imply less travel and lower eating out spending.