2/3/2012 6:14 AM ET
(RTTNews) - Eurozone retail sales declined unexpectedly in December as consumers were reluctant to spend even during the Christmas season, official data revealed Friday.
Retail sales were down 0.4 percent on a monthly basis in December, marking a second consecutive fall, while economists had expected a 0.3 percent rise. The decline for November was revised to 0.4 percent from 0.8 percent.
Weak consumer spending poses a serious threat to hopes that Eurozone economic activity can return to growth in the first quarter of 2012 after a likely contraction around 0.4 percent quarter-on-quarter in the fourth quarter of 2011, IHS Global Insight Chief European Economist Howard Archer said.
In December, sale of food products were down 0.2 percent from the prior month. At the same time, the pace of decline in the non-food sales was steady at 0.1 percent.
On a yearly basis, retail sales decreased 1.6 percent in December, following November's revised 1.5 percent drop. The decline also exceeded the 1.3 percent fall expected by economists.
In 2011, euro area retail sales fell by 0.6 percent from a year ago.
In the EU27, retail sales grew 0.3 percent from November, and increased 0.1 percent from the previous year.
Eurozone private sector expanded in January for the first time in five months, the final results of the Purchasing Managers' survey showed today. The composite index rose to 50.4 in January from 48.3 in December.
Despite inflation starting to retreat across the Eurozone, consumers' purchasing power is likely to remain limited in many countries from muted wage growth and tighter fiscal policy, Archer said.
Euro area inflation has slowed from a three-year high seen in November to 2.7 percent in January. Further, slowing pipeline inflation reflect weak inflationary pressure in the economy, which has boosted chances of a rate cut next week.
The European Central Bank left its interest rate unchanged at 1 percent in January, after lowering it in the previous two months to spur growth.
by RTT Staff Writer
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