German retail turnover fell by the most since May 2011 in January, defying expectations for sales growth.
According to provisional results published by the Federal Statistical Office on Friday, retail turnover was down by an adjusted 1.6 percent month-over-month in January. The decrease was in contrast to a 0.5 percent increase expected by economists and also reversed December's revised 0.1 percent rise.
Meanwhile, retail turnover increased 1.6 percent annually in real terms, which was bigger than December's 0.3 percent rise. The year-over-year growth exceeded the 0.2 percent rise forecast by economists.
Both food and non-food sector sales underpinned the annual growth. Sale of food, beverages and tobacco advanced 1.2 percent and non-food sales climbed 2 percent.
In nominal terms, overall retail sales were down 1 percent from the prior month. Nonetheless, it grew 3.5 percent from the corresponding month of the previous year.
In February, inflation in the largest Eurozone economy accelerated to 2.5 percent on rising energy cost.
Amid weak export demand, the economy shrank for the first time since the first three months of 2009. Gross domestic product dipped 0.2 percent in the fourth quarter. The European Commission cut its German GDP forecast for this year marginally to 0.6 percent from 0.8 percent.
Still, the jobless rate remains at the lowest level in two decades. The unemployment rate stood at 6.8 percent in February.
The latest survey by market research group GfK showed that strong labor market and income expectations are likely to lift consumer confidence further in March.
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