Eurozone retail sales fell at its fastest pace on record in March as the worst global recession since the Second World War left millions unemployed, hurting the purchasing power.

Data released by the Eurostat showed Wednesday that retail sales fell a record 4.2% year-on-year in March. Economists had expected a 2.6% fall after a 4% decline in February. On a monthly basis, sales were down 0.6% after a revised 0.3% contraction in February.

Retail sales of food, drinks and tobacco dropped 5.2% year-on-year and sales in the non-food sector fell 1.9%.

Amid severe recession, companies were forced to shed employees. In March, the seasonally adjusted number of unemployed was 14.15 million, while the jobless rate jumped to its highest level since November 2005.

Among the Member States for which data were available, total retail sales fell in fifteen and rose only in Belgium, Austria and the UK. The largest decreases were observed in Latvia, Lithuania and Estonia.

The record fall in retail sales will strengthen the expectations for a further rate cut by the European Central Bank, which is due to announce its monetary policy decision on Thursday. Most economists expect the ECB to lower its key interest rate by 25 basis points to a new low of 1%. Moreover, the ECB is expected to announce a package of non-standard policy measures.

In the EU27, retail sales dropped 0.3% month-on-month following another fall of 0.8% in February. Compared to the previous year, there was a contraction of 3.1% versus a 3.3% decline in the previous month.

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