Eurozone Retail Sales Drop In February

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Eurozone retail sales decreased marginally in February after recording a modest rise in the previous month with consumers turning more cautious in their spending as the crisis-stricken currency-bloc struggles hard to recover from the ongoing recession.

The volume of retail sales decreased a seasonally adjusted 0.3 percent month-on-month, following January's 0.9 percent increase, statistical office Eurostat said. Economists had forecast sales to drop 0.4 percent, reversing the 1.2 percent gain originally reported for the previous month.

Driving the overall decline, sales of automotive fuel in specialized stores decreased 0.5 percent sequentially, and food, drinks and tobacco sales slid 0.1 percent. Retail sales of non-food products were lower by 1.1 percent than in the previous month.

The largest monthly decreases were registered in Estonia, France and Slovenia, while the biggest increases were recorded in Luxembourg, Denmark and Malta.

On an annual basis, trade in the retail sector declined at a slower rate of 1.4 percent in February than 1.9 percent in January, which was revised from a 1.3 percent fall. Sales were forecast to decrease 1.2 percent year-on-year.

In the European Union, retail sales stayed unchanged month-on-month in February, while on an annual basis they decreased 0.2 percent, data showed.

"Looking ahead, the likelihood is that Eurozone consumers will remain largely cautious in their spending for now at least which will limit recovery prospects," IHS Global Insight Chief UK and European Economist Howard Archer said.

Inflation in the euro area weakened for the third consecutive month to 1.7 percent in March from 1.8 percent in February as a marked deceleration in energy prices more than offset faster growth in service costs.

The European Central Bank at its latest rate-setting session resisted an interest rate cut despite clear signals that the region's economy remained stuck in recession during the first quarter. The main refinancing rate was kept at 0.75 percent for the ninth straight month.

Underscoring the increasing weakness of the economy, unemployment in the currency bloc stayed steady at a record high of 12 percent in February, which was the highest figure since the euro was launched more than a decade ago. Unemployment is expected to climb further in the coming months as governments shed public sector jobs in their austerity efforts.

Recent economic indicators for the currency-bloc paint a bleak picture. Survey data from Markit Economics released Thursday showed that the euro area private sector downturn intensified in March as the German economy reached a near-stagnation level.

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