The euro zone's inflation rate fell more than expected to 2.1 per cent in January, while December retail trade showed weak growth, EU statistics agency Eurostat said today.
Analysts had expected inflation would fall to 2.3 per cent from 2.4 per cent in December.
On Tuesday, preliminary figures showed Germany's annual rate of inflation slowed to 1.6 per cent in January from 2.1 per cent in December as a rise in health costs last year fell out of the consumer price index.
The January data brings the euro zone's inflation closer to the European Central Bank's target of 2 per cent, reinforcing expectations that no interest rate rise is on the cards for many months.
The ECB left its main rate unchanged at 2 per cent yesterday, with no major inflationary pressures building and economic growth yet to pick up.
The European Union's statistics agency reported euro zone retail trade rose 0.2 per cent month on month in December, the Christmas shopping season, and was up 0.5 per cent year-on-year.
The small increase in retail sales in the usually busy end of the year shopping period may be another sign of weakness in the euro zone's economic recovery.
Analysts say euro zone growth is undermined by the strong euro - which harms exports and by poor domestic demand due to high unemployment and an over-regulated economy.