German retail sales rise but import prices cloud outlook

German retail sales in February exceeded expectations but a rise in import prices indicated a looming inflation surge, potentially dampening consumer spending, according to data published on Monday.

Retail sales rose by 0.8% compared with the previous month, data showed on Monday. Analysts polled by Reuters had predicted a 0.2% increase.

However, economists do not expect a consumption spree.


"The bad mood among consumers is a dent in further spending enthusiasm," said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank. "Worries about one's own job are currently increasing as a brake on consumption."

The number of unemployed increased by 26,000 in March to 2.92 million, approaching the 3 million mark for the first time in 10 years.

February data showed import prices up 3.6% year-on-year, marking the highest increase in more than two years due to higher food prices.

Since the German economy purchases many primary products and raw materials from abroad, higher import prices are reflected in inflation data with a time lag.

Germany will publish inflation data for March on Monday, with the inflation rate expected to drop to 2.4% from 2.6% the previous month.