By Geoffrey Smith
Investing.com — German retail sales posted their biggest jump in six months in July, as a COVID-free summer tourism encouraged consumers to open their wallets despite painfully high fuel and travel prices.
Sales rose 1.9% in real terms, that is, adjusted for inflation and seasonal and calendar effects. That more than offset June’s decline and was comfortably ahead of analysts’ forecasts for another drop of 0.4%.
In year-on-year terms, the decline in sales narrowed to 2.6% from 9.6% in June, also ahead of expectations.
The numbers were stamped by the ongoing surge in gasoline prices: filling stations’ sales rose by 1.3% on the month and were 7.5% higher than in May, the month before the government introduced a temporary rebate on fuel duty.
Food sales rose 2.1% on the month but were still down 4.4% from March and down 6.1% from a year earlier, reflecting in part the reopening of restaurants as the pandemic has faded. Other pandemic-related effects were also in evidence, as sales of household appliances and DIY stores fell another 0.1%, to be down 9.8% on the year.
“These are surprisingly robust numbers in the face of the fall in consumer sentiment and real-income sapping rise in inflation,” said Pantheon Economics analyst Claus Vistesen in a note to clients.
He said he’s still penciling in declines for August and September, as the expiration of the duty cut is likely to lead to a sharp reduction in spending on fuel. That would be in line with the sharp drop in consumer confidence already registered in the last two months.
Vistesen expects sales to fall by around 0.3% over the third quarter, having already fallen 3.6% in the second quarter.