Wednesday December 3, 10:16 AM
Euro zone Oct retail sales fall more than expected
BRUSSELS, Dec 3 (Reuters) - Euro zone retail sales fell much more than expected in October, underlining weak consumer demand in the recession-hit economy and adding to arguments for a deep interest rate cut by the European Central Bank on Thursday.
Retail sales in the 15-country area fell 0.8 percent month-on-month and 2.1 percent year-on-year -- the fifth straight annual drop, the European Union statistics office, Eurostat, said on Wednesday.
Economists polled by Reuters had expected a 0.4 percent monthly fall and a 1.4 percent annual decline.
Retail sales are an indication of household demand. Falling private consumption was one of the reasons for a shrinkage in the euro zone economy in the second and third quarters.
Economists had put part of the blame for weakening household demand on high inflation, which reached a peak of 4.0 percent in July. But now that inflation is falling rapidly along with oil prices, weak demand is more likely to be a result of an uncertain economic outlook.
Euro zone inflation slowed to 2.1 percent in November from 3.2 percent year-on-year in October against the European Central Bank's target of just below 2 percent.
Markets expect the bank will cut interest rates by 50 basis points on Thursday, or maybe more, for the third month in a row to help kick-start the economy.
(Reporting by Jan Strupczewski, editing by Dale Hudson) Keywords: EUROZONE ECONOMY/RETAIL
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