Retail sales in Euro Zone declined by 0.6% in September 2006, as compared to August retail sales but rose by 1.4% year-on-year, as per Eurostat, statistics office of EU.
However, economists believe that this will not change ECB's (European Central Bank) plan to hike the interest rates. Private consumption in the Euro Zone has been a setback for the economy, as unemployment & slow growth in wages has limited household spending.
September decline was seen after month-on-month increases in August (0.5 %) & July (0.4%). Eurostat said that it had altered August 2006 month-on-month rise from previous 0.7% estimate. Year-on-year rise for August 2006 was revised to 2.0% from 2.4%.
Sales for food, drink & tobacco increased by 0.4% in September 2006 from August 2006, but sales for non-food items fell by 1.4%. Economists had predicted month-on-month rise of 0.2% in September & year-on-year increase of 2.4 % but some economists indicated a risk of decline after disappointing sales in France & Germany.
Retail sales in Germany declined by 1.7% in September 2006, while retail sales in Austria fell by 3.7%. However, overall retail sales in France were stable in September 2006. Household consumption in France for manufactured goods declined by 2.7 % but this figure only had a limited affect on overall retail sales.
"Unenthusiastic consumer spending & high unemployment are major setbacks in Germany's road to recovery from economic stagnation. Growth will remain slow in coming months," said an analyst at RNCOS.
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