FRANKFURT, May 4, 2009 (AFP) - German retail sales plunged by 1.0 percent in March from the previous month, figures released on Monday 4 May by the national statistics office showed, as rising unemployment hit consumer sentiment.

Shoes and boots are on display in the western German city of Duesseldorf in March. German retail sales plunged by 1.0 percent in March from the previous month, figures released by the national statistics office showed, as rising unemployment hit consumer sentiment. (DDP/AFP/File/Henning Kaiser)

Analysts polled by Dow Jones Newswires had forecast a much more modest drop of 0.2 percent in Europe's biggest economy,

On a 12-month basis, retail sales shed 1.5 percent, the Destatis statistics service said, even though March 2009 had two more working days than the same month a year earlier.

Among non-food products, German shoppers nonetheless picked up more cosmetics and pharmaceutical items, the data showed.

Mail-order and Internet sales were also stronger.

But the sharp drop increases the chances that the European Central Bank will cut its main interest rate to a record low of 1.0 percent on Thursday 7 May to give the recession-hit 16-nation eurozone economy a further boost.