Euro zone retail sales turned out much weaker than expected in October after falling against the previous month and barely rising in annual terms, the European Union's statistics office said today.
Retail sales in the 13 countries using the euro fell 0.7 per cent month-on-month and rose 0.2 per cent year-on-year, Eurostat said.
Economists polled had expected a 0.3 per cent monthly decline and a gain of 1.3 per cent annually.
September's retail sales - an indication of consumer demand - were revised 0.1 percentage point lower to a 0.2 per cent monthly rise and a 1.5 per cent annual gain. From the available data, sales fell in all euro zone countries in October.
The biggest drop came in the zone's largest economy, Germany, where sales fell 3.3 per cent month-on-month.
Household demand was the main driver of the euro zone economy in the third quarter, helping it grow by 0.7 per cent against the previous three months despite a negative contribution from trade.
But a global credit crunch, dogging financial markets since August, has hit consumer and business confidence through higher market credit costs and is expected to slow growth next year.
The European Central Bank, which has been concerned that a tightening labour market may boost consumer inflation as more people have money to spend and some workers demand higher wages, meets on interest rates tomorrow.
But economists expect it will not raise interest rates despite a spike in inflation well above its target of just below 2 per cent, as the expected economic slowdown should eventually ease inflationary pressures.