Retail sales in the eurozone rose for the third straight month in December, and at the fastest annual pace in almost eight years, an indication that falling oil prices are boosting consumer spending and helping to support economic growth. Separate surveys of purchasing managers also released Wednesday showed the eurozone economy grew more rapidly than first estimated in January, driven by pickups in Germany, Spain and Italy, while France floundered. The European Union's statistics agency said retail sales rose by 0.3% from November, following two straight months in which they increased by 0.7%, larger rises than first estimated. That left sales 2.8% up on December 2013, the largest increase since March 2007, or well before the onset of the global financial crisis that tipped the eurozone economy into its long slump. The strong rise in sales over the final three months of last year may ease fears that the eurozone is at risk of a slide into deflation, a self-perpetuating spiral in which consumers postpone purchases because they expect prices to drop, leading to a fall in output and further declines in prices. However, surveys of purchasing managers underlined the scale of the challenge facing the European Central Bank as it prepares to launch its program of quantitative easing next month, as businesses cut their prices at the fastest rate in nearly five years. Data firm Markit, which surveys more than 5,000 businesses across the eurozone, said Wednesday its composite purchasing managers index--a measure of activity in the manufacturing and services sectors--rose to 52.6 in January from 51.4 in December. A reading below 50.0 indicates activity is declining, while a reading above that level indicates it is increasing. The PMI was revised from a preliminary estimate of 52.2, and signaled the eurozone economy grew at the fastest pace since July 2014. But even after that acceleration, growth remained modest. The January pickup was driven by service providers in Germany and Spain, while activity in Italy also increased. That left France lagging behind the other major eurozone economies, as its composite PMI fell to 49.3, and a two-month low. The pickup looks set to be sustained, as new orders rose, and businesses hired additional workers at the fastest rate since mid-2011. But they continued to cut their prices, opting to pass on declines in their own costs as a result of falling oil prices. That behavior suggests the eurozone won't soon emerge from a period of falling consumer prices. " Deflationary pressures will remain as lower oil prices feed through to the economy," said Chris Williamson, Markit's chief economist. On Jan 22, the ECB launched a program of bond purchases using freshly created money that is likely to total more than 1 trillion euros (more than $1.148 trillion), with the aim of returning the inflation rate to its target of just under 2%. In January, consumer prices were 0.6% lower than a year earlier.

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