Fall in eurozone retail sales

Eurozone shoppers are now far more cautious

Retail spending across the 15 nations in the euro area declined more than expected in March, official European Union figures have shown.

Hit by soaring fuel and food bills and concerns about the global economy, retail sales fell 0.4% from February, and by 1.6% compared with March 2007.

Economists had expected a monthly rise of 0.2% and an annual gain of 0.6%.

The fall in eurozone retail sales came as the British Retail Consortium said UK prices rose an annual 1.2% in April.

This was led by food prices increasing by 4.7%, while non-food items fell 0.6%, led by discounting of electrical goods.

'Consumer scepticism'

Global Insight economist Howard Archer said March's weak eurozone retail figures raised concerns about declining consumer resilience.

"The second successive monthly decline in retail sales in March maintains scepticism that the consumer will significantly help out the eurozone economy over the coming months," he said.

The decline in eurozone retail sales puts the European Central Bank (ECB) in a dilemma regarding future interest rates.

With eurozone inflation now at a record 3.6% high, the ECB does not have much room to cut rates to help boost economic growth without risking a further rise in inflation.

Eurozone interest rates were kept on hold at 4% last month.

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