German retail sales decline unexpectedly in August

German retail sales suffered an unexpected monthly decline, although a sharp yearly increase indicated private consumption remains a key driver for the German economy.

According to the Federal Statistics Office, retail sales fell 0.4% month-on-month compared with a sharp 1.6% rise registered in July and falling short of analysts’ expectations for a 0.2% gain.

On a year-on-year basis, retail sales grew 2.5% but remained short of the 3.1% consensus forecast and comfortably below the 3.8% year-on-year increase registered in the previous month.

However, from January to August, retail sales surged 2.8% year-on-year in real terms, the biggest increase on record for the period since the Federal Statistics Office began collecting data in 1994.

Among individual sectors, online and mail-order sales continued to grow strongly in August, although sales in textiles, clothing, shoes and leather goods slumped 10% year-on-year.

On Tuesday, Germany’s headline CPI fell short of analysts’ expectations, leading to speculations the European Central Bank might need to extend its quantitative easing programme.