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MADRID, Jan 29 (Reuters) - Spanish retail sales fell steeply although less than expected in December, and analysts said the outlook remained poor as unemployment soars and house prices crumble.
Sales retreated 6.1 percent year-on-year in calendar-adjusted terms during December, the 13th straight month of decline but better than a record 8-percent plunge in November and the 8.9 percent slump predicted in a Reuters poll.
Consumer confidence inched up in December as retailers slashed prices by up to 80 percent, energy bills fell and mortgage costs shrank thanks to a string of cuts in official interest rates, according to a credit institute survey earlier this month.
"Inflation is really falling off a cliff in Spain, so for those people who have kept their jobs, this implies an improvement in purchasing power," said economist Martin Van Vliet at ING.
Sales of personal goods like shoes and clothes fell 8.1 percent in December, less than a 12.2 percent fall the previous month. Household goods were down 13.4 percent after a crushing 19.9 percent fall in November.
"It's a bad figure, but the small moderation in the rate of decline is positive and we'll have to see if it's a one off or the beginning of a change of trend," said Sergio Diaz Valverde of Caja Madrid.
Economists say Spain faces its worst recession in 50 years during 2009 and that unemployment will rise towards 20 percent after reaching the highest rate in the European Union last year at 13.9 percent.
The government estimates house prices slipped 3.2 percent last year, the first decline in over a decade, and they still have a long way to fall given private sector forecasts of a 20-30 percent drop from their 2007 peak.
"We may have a month of slightly better consumer spending but I think the trend is for it to worsen in Spain," said Van Vliet. (Reporting by Andrew Hay; Editing by Jason Webb)