Retail sales in the 15 countries using the euro rose 0.4% month-on-month after three consecutive months of contraction but dipped 0.1% year-on-year, the third decline in a row, the European Union’s statistics office said. Economists polled by Reuters had expected the monthly gain, but also had forecast a year-on-year rise of 0.1%. The figures, a gauge of consumer willingness to spend, come a day after data showed household demand contracted 0.1% in the last quarter of 2007 against the previous three months.
Some economists have pointed to rising inflation, fuelled mainly by food and energy prices, as eating away at consumers’ disposable incomes and therefore overall demand. With other components of domestic demand, such as investment and government consumption also declining, and external demand waning, economists expect economic growth in the Q1 to be below the euro zone’s potential of 0.5%. But the slower growth is likely to help curb inflationary pressures eventually and allow the European Central Bank to cut interest rates in support of growth, economists have said. (Reuters)
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