German retail sales fell sharply in June, data released Friday showed, adding to signs that consumers in Europe's biggest economy are curtailing spending in the face of rising inflation and growing economic uncertainties, DPA said. The nation's statistics office said seasonally adjusted retail sales fell by 1.4 per cent month on month in June and by 3.9 per cent compared to the same month last year. Analysts had expected June German retail sales to drop by a more modest 0.5 per cent month on month and by 0.8 per cent on the year. The release of the latest figures came against the backdrop of signs that inflation is gaining ground in both Germany and Europe just as economic growth in the region is slowing. Data published Thursday showed inflation in the 15-member eurozone hitting a record high of 4.1 per cent in June, spurred on by high energy and food costs. German inflation hit 3.4 per cent in June. "The massive rise in energy and food prices is robbing households of their purchasing power," said Matthias Rubisch, economist with Commerzbank AG. German consumer confidence has slipped to a five-year low, a key survey released this week showed as concerns grew in the country's households about the threat of recession. Drawn up by the Nuremberg-based marketing research group GfK, the forward-looking index reported that consumer confidence in Germany slumped to 2.1 in August, a marked fall from the July level of 3.6. Despite a round of recent pay rises, the GfK's separate index gauging income expectations fell to minus 20, the lowest level since August 2004. "Fear of shrinking purchasing power has led to a renewed reduction in the propensity to buy, although the drop is markedly more moderate than the fall in the indicator for income expectations," the GfK said releasing the report.
