Decline in retail sales in March German as Inflation is accelerated

April 29, 2011, 3: 17 pm EDT by Christian Vits

(Updates with comment from Economist in the fourth paragraph).

April 29 (Bloomberg) - German retail sales fell for a second month in March as the accelerated inflation, eroding household purchasing power.Sales, adjusted for inflation and seasonal movements, a decrease of 2.1% in February, when they went down by 0.4%, the Federal Office of statistics in Wiesbaden said today. Economists expected a 0.2 percent gain, according to the median of estimates 18 during a Bloomberg News survey. Since a year earlier, sales decreased by 3.5 per cent.German inflation accelerated to 2.6% in April, the fastest pace in 2 1/2 years, driven by soaring oil prices. At the same time, unemployment dropped to a minimum of 19 years as businesses stepped up production to meet export orders. The Government expects greater Europe's economy to expand 2.6% this year after a record growth of 3.6% in 2010. "."A negative reading in March is not unusual if Easter falls in April," said Ulrike Rondorf, an economist at Commerzbank AG in Frankfurt. "In the first quarter, retail sales still exceed the fourth quarter of 0.2% average."Evolution of the consumer price is casting "slight shadow" on an otherwise "positive" economic perspective, the Ministry of the economy said on the orders of German plant for April 19 and industrial production rose more than economists predicted in February. "Negative impact" private consumption will recover sharply this year and also grow in 2012, said Andreas Scheuerle, Economist for Dekabank in Frankfurt. "" " However, while the labour market has a positive impact on the expenses of the private sector, we also have a negative impact of the wave of inflation. "Consumer confidence will decline for a second month of may as grapple households with higher food and prices of energy, market based in Nuremberg firm GfK AG said this week. Business confidence fell for a second month in April after oil prices rose to the highest in over two years. "Inflation is certainly the major risk for the consumption of the Germany individuals. "in particular, consumers are sensitive to rising prices at the pump," said Mario Gruppe, Economist at the NordLB in Hannover Germany. "However, a negative reading is not the end of the world that we will see a robust economic recovery despite the threat of inflation risks.".

-With the help of Naomi Kresge in Berlin, Manus recesses in London and Jana Randow in Frankfurt. Editors: Matthew Brockett, Hayden Jones

To contact the reporter on this story: Christian Vits to Frankfurt to cvits@bloomberg.net

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

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