(Adds detail, background, economists)
BERLIN Aug 31 German retail sales fell
unexpectedly in July, slipping by 0.9 percent in real terms
month-on-month, preliminary data showed on Friday, as consumers
feeling the squeeze from higher fuel prices cut back on other
The notoriously volatile indicator was down 1.0 percent on
an annual basis. Economists polled by Reuters had forecast
retail sales would rise by 0.2 percent on the month and gain 0.4
percent on the year.
"Fuel prices are reaching record levels and this is the kind
of inflation that people really feel, which in the very
short-term leads households to save money on other expenditure,"
said Christian Schulz at Berenberg Bank.
"It doesn't mean that household consumption overall goes
down but that retail sales suffer so I think the key driver
behind this decline is fuel price inflation," he said.
Data earlier this week showed annual inflation accelerated
to 2.0 percent in August in Europe's largest economy, on the
back of higher energy prices.
But despite Friday's weak data, strong wage rises, a stable
employment situation and steady consumer morale suggest private
consumption will still be able to carry the traditionally
export-driven German economy through the euro zone debt crisis
and a slowdown in global demand this year, economists said.
"Consumption remains a fundamental pillar of support for the
German economy," said Sal. Oppenheim's Ulrike Kastens.
"In 2012 and 2013 we will see positive growth figures for
private consumption so I wouldn't overestimate the decline in
July retail sales," she said.
German retailers have felt the pinch from the euro zone
crisis in recent months, with Puma saying it would
reduce sponsorships and the number of products it sells, and
department store chain Karstadt saying it would cut jobs.
But the German retail market remains robust compared with
that of its crisis-stricken euro zone peers like Greece, where
retail sales fell by 10.3 percent in May, or Spain, where retail
sales fell for a 24th straight month in June.
Data from Germany has looked increasingly ominous in recent
weeks, with economic growth slowing to 0.3 percent in the second
quarter on a sharp drop in investment, the private sector
contracting for a fourth straight month in August and a key
business sentiment survey taking a turn for the worse.
June retail sales were revised upwards to a gain of 0.5
percent on the month, from a previously reported drop of 0.1
percent. On an annual basis June sales were revised up to a gain
of 3.7 percent from an increase of 2.9 percent.
(Reporting by Michelle Martin; Additional reporting by Klaus
Lauer; Editing by Louise Ireland and Noah Barkin)