Euro zone retail sales recorded their biggest ever annual fall in June, data showed today, in another sign of an economic slowdown that may convince the European Central Bank to keep interest rates unchanged.
Retail sales, a volatile indication of consumer demand, declined 3.1 per cent year-on-year in the 15-country euro zone, the biggest annual fall since measurements started in 1996, the European Union statistics office Eurostat said.
The figure fell 0.6 per cent month-on-month.
"It's real bad... We cannot rule out one quarter of negative growth, we are close to that," said Gilles Moec, economist at Bank of America.
Economists polled by Reuters had expected a 0.6 per cent monthly drop and a fall of 1.2 per cent year-on-year.
Eurostat revised down its retail sales data for May to an increase of 0.5 per cent month-on-month from 1.2 per cent initially reported. It also revised downwards the annual figure for May to a drop of 0.1 per cent from a previously estimated increase of 0.2 per cent.
The figures, the latest in a series of gloomy data pointing to the euro zone's economic slowdown if not contraction, boosted expectations the ECB will leave interest rates on hold this year.
"The euro zone retail sales figures for June are the latest in a string of very weak economic data that will strengthen the hand of the doves on the ECB's governing council in blocking calls for further monetary policy tightening," said Martin van Vliet, economist at ING Bank.
ECB policy-makers meet on Thursday and are widely expected keep rates steady. The bank increased its main rate to 4.25 per cent from 4 per cent in early July to fight resurgent inflation.
Euro zone economy is slowing as high prices of energy and food are hitting consumer spending power, while a strong euro hits exporters.