German retail sales post monthly drop in Aug but surge on the year

German retail sales unexpectedly fell on the month in August, but a strong yearly rise suggested private consumption would nonetheless remain an important growth driver for Europe's largest economy this year.

Retail sales, a notoriously volatile indicator, fell by 0.4 percent on the month in real terms after rising sharply the previous month, the Federal Statistics Office said. The reading was below the Reuters consensus forecast for a 0.2 percent increase.

On the year, retail sales increased by 2.5 percent, undershooting expectations for a 3.1 percent gain.

From January to August, retail sales jumped by 2.8 percent in real terms compared with the same period in 2014. The statistics office said that was the strongest increase it had recorded for that period since it began collecting the data in 1994.

Germany's HDE retail association said last week it sees a record year ahead thanks to rising wages and low inflation.

The Munich-based Ifo think-tank has said that the current influx of refugees and asylum seekers, expected to hit 800,000 by the end of this year, has further boosted the retail sector, in particular sales of groceries, with supermarkets seeing a clear rise in turnover that was expected to continue.

While strong growth in online and mail-order sales continued in August, sales in textiles, clothing, shoes and leather goods saw a significant decline of 10 percent on a year-on-year.