Eurozone retail sales defied expectations of a monthly rise in December and fell despite a Christmas shopping spree, pointing to a steady decline in consumer demand and a slowing economy. Retail sales in the then 13-nation currency area fell 0.1 percent month-on-month and 2.0 percent year-on-year, the European Union's statistics office said on Tuesday.
Economists polled by Reuters had expected a 0.3 percent monthly rise and only a 0.6 percent annual easing. "It is further evidence of economic weakening," said Stephane Deo, economist at UBS. It was the third monthly fall in a row, underlining softening household demand. Quarter-on-quarter, retail sales in the last three months of the year were down 1 percent, economists said.
"It appears that eurozone consumers are limiting their spending in the face of heightened concerns over the economic outlook and inflation, worries about long-term personal finances, tightening lending conditions and higher interest rates," said Howard Archer, economist at Global Insight.
This deepens the dilemma of the European Central Bank, which on the one hand faces slowing growth, but on the other has to deal with the highest eurozone inflation since records began in 1997 - 3.2 percent in January. The ECB wants to keep inflation just below 2 percent.