Euro zone retail sales were much weaker than expected in March, falling in monthly as well as annual terms and underlining concerns about the slowing economy.
Retail sales, an indication of consumer demand, in the 15 countries using the euro fell 0.4 per cent month-on-month for an annual decline of 1.6 per cent, the European Union statistics office said.
Sales fell month-on-month in all euro zone countries. In annual terms only Austria and Finland saw rises, the data available showed.
Economists have pointed to rising inflation, fuelled mainly by food and energy prices, as eating away at consumers' disposable incomes and therefore overall demand. Inflation hit a record high of 3.6 per cent year-on-year in March.
With the US economy likely to slow sharply or even contract in the first half of this year and a strong euro hurting euro zone exports, domestic demand is important to underpin slowing euro zone growth.
This underlines the European Central Bank's interest rate dilemma, as the bank strives to bring inflation down to its target of just below 2 percent amid slowing economic growth.