Euro Zone Retail Sales Down 2.1 Percent

December 3, 2008 11:55 a.m. EST

Brussels, Belgium (AHN) - The effect of the global economic crisis was sharply felt at the 15-nation euro zone which registered a 2.1 decline in retail sales for October compared to year-ago level.

The data, placed side-by-side with September statistics, showed a 0.8 percent decrease.

The slump of retail sales in the zone is expected to increase the chances of another round of benchmark interest rates throughout the European Union. The European Central Bank is expected to further reduce the current key lending rate of 3.25 percent when it meets Thursday. In October the ECB cut benchmark interest rates by half a percentage point.

Nick Kounis, chief European economist of Fortis Bank, explained to BBC, "Worries about the outlook for the economy and the labor market are probably prompting households to save relatively more... This leaves High Street activity heading for a renewed deterioration in the fourth quarter following the improvement seen in the third."

Outside the euro zone, retail sale is also moving slow. British stores are expecting American shoppers to be attracted to U.K. malls because of the weaker value of the pound as well as for Britons to buy local instead of going overseas for their holiday shopping. British stores and travel agencies are using the exchange rate as a come on to American tourists, but the U.S. shoppers are also holding on tight to their wallets.

Geoffrey Dicks, an economist at the Royal Bank of Scotland, said, quoted by the International Herald Tribune, "Consumers are a fragile beast... Americans aren't traveling or spending either, if they're scared to lose their jobs."