Euro zone retail sales turned out much weaker than expected in February on the back of falls in Germany and Spain,
Retail sales, an indication of consumer demand, in the 15 countries using the euro fell 0.5 per cent month-on-month for an annual decline of 0.2 per cent, the European Union's statistics office said today.
Eurostat revised upwards January retail sales data to growth of 0.5 per cent from 0.4 per cent month-on-month and an increase of 0.2 per cent annually from the previously reported 0.1 percent contraction.
Economists pointed to rising inflation, fuelled mainly by food and energy prices, as eating away at consumers' disposable incomes and therefore overall demand.
Willingness to spend is also being curbed by uncertainty about the economic outlook and personal finances, as seen in the latest European Commission surveys, and higher market interest rates that have been boosted by turmoil on financial markets.
With the US economy likely to slow sharply or even contract in the first half of this year and the strong euro hurting euro zone exports, domestic demand is important to underpin slowing euro zone growth.