Shoppers in the eurozone cut back on their spending in February as households faced stubborn inflation, growing unemployment lines and pay freezes across the public and private sector, Reuters reported.

Retail sales in the 17 countries using the euro fell 0.1 percent month on month, Eurostat said on Wednesday, April 4. In an indication that household demand will do little to revive the subdued eurozone economy as it heads into recession this year, retail sales were down 2.1 percent on an annual basis. That compared with a forecast of a 0.9 percent fall.

Consumers surprised economists in January by increasing their spending after four months of falls, but in February cautious shoppers, particularly in Germany, appeared to lose confidence.

In Germany, February sales fell 1.1 percent on the back of a fall the previous month, although volumes rose 1.2 percent in France, the bloc's other economic motor.

An unprecedented cash injection to banks by the European Central Bank helped to calm panicky financial markets at the start of this year and some early indicators suggested the euro zone's economy could be stabilising after 2011's collapse in business confidence.

But the region that generates about 16 percent of the world's economic output is still struggling to put its two-year debt saga behind it. Euro zone manufacturing activity contracted in March while oil prices are keeping inflation relatively high at 2.6 percent despite sluggish consumption. Unemployment is at almost 11 percent of the working population.

The ECB is expected to hold interest rates at a record low of 1 percent on Wednesday, judging that renewed concern about southern Europe's economic health make it difficult to raise rates to contain energy price pressures.

"The prospects for overall consumer spending in the eurozone look worrying in the near term at least," Howard Archer at IHS Global Insight said. "Although consumer confidence rose to a seven-month high in March, it is still low compared to long-term norms."