LONDON (Dow Jones)--Retail trade in the euro zone disappointed in July, growing more slowly than economists had expected.

The volume of retail sales rose just 0.1% on the month in July, dragged down by sales of nonfood products such as clothing and household goods which fell by 0.1% on the month, European statistics agency, Eurostat said Wednesday.

Compared with July 2006, retail sales grew 0.5%, substantially less than economists had predicted. In a Dow Jones survey last week economists said they expected sales to grow 0.3% on the month and 1.0% on the year.

Eurostat revised June's data upward, reporting a gain of 0.6% on the month, up from a previously estimated 0.4%, and growth of 1.0% on the year, up from 0.9%.

Most economists had expected the growth rate to rise in July, predicting that warm weather and shop discounting would encourage shoppers to spend money. However, Wednesday's data suggest that the expected improvement in consumer sentiment and spending has yet to materialize.

In Germany - the euro zone's largest economy - retail sales posted lower growth than in June, rising 0.3% on the month, compared with a stronger 1.2% a month earlier.

The retail sales data are unlikely to affect the outlook of the European Central Bank, which is currently more focused on the recent financial market turmoil.

The bank's governing council will meet Thursday to set interest rates for the single currency area and is widely expected to leave them on hold as it tries to assess the impact of the recent market fallout.

It has raised the key interest rate eight times since December 2005 in a bid to curb inflationary pressures in the region's economy.

In the 27 countries that make up the European Union, retail sales grew by 0.1% on the month and 2.2% on the year.

The following table details monthly percentage changes in retail sales volume in July and June:

July June

Euro Zone +0.1 +0.6r

Austria -1.6 +2.1r

Belgium -3.5 +3.0r

Finland -0.4 +1.5r

France n/a +0.4r

Germany +0.3 +1.2r

Greece n/a +0.7r

Ireland n/a -2.9r

Italy n/a n/a

Luxembourg -0.4 +10.6r

Netherlands n/a +1.7r

Portugal -1.2 +2.7r

Spain 0.0 +0.4r

Slovenia -0.9 +0.4

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