SPANISH retail sales suffered their second largest fall on record in March as soaring unemployment and tumbling house prices scared off shoppers.
Faced with their worst recession since the 1930s, Spaniards cut back on purchases of clothes and big-ticket consumer goods, sending overall retail sales down 8.2 percent in March.
That was the 16th consecutive month of decline but less than a forecast 9.9 percent fall, and a record drop of 9.1 percent in February.
Some analysts said the retail slide could be easing as interest rate cuts and lower energy costs boost disposable income by 40 billion euros, according to a government estimate.
It seems that things are beginning to stabilise along the lines of a more conventional recession, said Nicolas Lopez at M&G Valores.
Others said it was too early to talk of recovery given unemployment is rising faster in Spain than any other developed country, and expected to hit 20 percent this year. You're starting to get easier comparables because we're in a decline for over a year, but an 8 percent fall is certainly not small, said analyst Luca Solca at Bernstein in London.
The data was skewed by the fact Easter fell in April this year, rather than March, meaning there were more people on holiday in March last year and more shoppers.
Spain has been hit by both the global financial crisis and a housing boom collapse, forcing retailers to offer heavy discounts to lure in shoppers.
Spanish clothing brands like Zara have launched a price war, with the flagship of Europe's largest clothing retailer Inditex offering a new label called Special Price.
Chains such as Cortefiel are offering 40 percent discounts, even though summer sales traditionally start in July.
Department store El Corte Ingles, Spain's largest retailer, is giving interest free loans on goods like sofas and TVs.
The March data showed clothing and footwear sales fell 6.9 percent year-on-year, while household goods tumbled 18.8 percent, adding to risks Spain could enter a deflationary cycle later in the year.