Bloomberg News

German Retail Sales Unexpectedly Dropped on Oil-Driven Inflation

June 30, 2011

June 30 (Bloomberg) -- German retail sales unexpectedly fell in May as oil-driven inflation sapped household incomes.

Sales, adjusted for inflation and seasonal swings, fell 2.8 percent from April, when they stagnated, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 0.5 percent, the median of 25 estimates in a Bloomberg News survey showed. Sales rose 2.2 percent in the year.

“Oil and gasoline prices were still quite high in May and that may have kept people from spending,” said Christian Schulz, an economist at Joh. Berenberg Gossler & Co. in London. “At the same time, Germany is booming and the overall trend is for stronger consumer spending.”

Increasing export orders from Asia have prompted German companies to step up hiring, sending unemployment to the lowest in two decades. While Germany’s Bundesbank earlier this month raised its 2011 growth forecast, rising energy costs are leaving households with less money to spend.

While crude oil prices have retreated over the past month, they’re still up 26 percent from a year earlier. Germany’s inflation rate, calculated using a harmonized European Union method, held at 2.4 percent in June. That’s above the European Central Bank’s 2 percent limit.

--With assistance from Jana Randow in Frankfurt. Editors: Simone Meier, Fergal O’Brien

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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