Euro zone retail sales turned out much weaker than expected in November, data showed on today.
The European Union's statistics office said retail sales in the euro zone fell 0.5 per cent month-on-month and 1.4 per cent year-on-year; economists polled by Reuters had expected gains of 0.5 per cent monthly and annually.
The data depressed the euro from $1.4719/21 just before the release to $1.4703/05 afterwards as it increased the likelihood that the ECB would eventually have to cut interest rates as the economy slows, a currency strategist said.
The fall in retail sales, an indication of domestic demand, is in line with a clear drop in economic sentiment and consumer confidence in November as measured by a monthly survey by the European Commission.
The data underlines a policy dilemma for the ECB, which amid slowing economic activity faced consumer price inflation of 3.1 per cent year-on-year in December against its target of just below 2 per cent.
The ECB meets on rates on Thursday. Economists expect it to keep rates on hold at 4 per cent for most of this year.
