(Frankfurt, DEU) - High oil prices and the eurozone debt crisis are taking their toll on retail sales in Germany, which fell for the second month in a row in February, official data showed on Friday.
Retail sales dropped by 1.1 percent in February compared with the level in January in price, seasonally and calendar-adjusted terms, according to provisional figures by the federal statistics office Destatis.
Analysts had been expecting an increase of 1.2 percent.
On a 12-month basis, however, retail sales rose by 1.7 percent in February, the statisticians calculated.
Monthly retail sales data are volatile and subject to frequent revision, but the weak trend evident since August remains intact, said Christian Schulz, senior economist at Berenberg Bank.
"This period coincides with the intensification of the euro crisis, suggesting that households do not yet trust that the crisis is under control," Schulz said.
He attributed the drop in retail sales to "oil prices, the cold winter and the euro crisis", which were making German consumers reluctant to "open their purse and spend, despite low and falling unemployment and extremely low interest rates."
With average monthly sales in the first two months of this year down by 1.5 percent from the the monthly average in the fourth quarter of last year, the economy "is likely to have contracted in the first quarter of 2012," Schulz warned.
Gross domestic product (GDP) already shrank by 0.2 percent in the last three months of 2011 and two quarterly GDP contractions are seen as a recession.
The closely-watched GfK survey of consumer confidence, released earlier this week, suggests confidence will stall next month, dented by high oil prices.
Nevertheless, household spending should remain robust enough to keep Europe's biggest economy from falling into recession, GfK found.
Berenberg Bank's Schulz was confident that "the fundamentals for more spending remain firmly in place. Eventually, this will translate into higher retail sales and support economic growth from the second quarter onwards."
Newedge Strategy analyst Annalisa Piazza suggested the weaker-than-expected number "partially reflects the exceptionally adverse weather conditions, ie. heavy snowfall in first part of the month."
However, she believed the current sluggishness in retail activity "is only the sign of caution in the current uncertain environment rather than a symptom that German domestic demand is collapsing."
Consumer confidence had edged higher since the start of the year and the labour market showed signs of further strength, "leaving a quite favourable scenario for future spending," the analyst said.
Peter Kaidusch at Natixis also believed the consumer climate "is still solid."
The latest jobless figures released on Thursday showed "that the situation on the labour market has improved in March," he said.
"On top of that, higher wage agreements are in reach for employees in several sectors. All in all, we come to the conclusion that private consumption should be a solid pillar of the German economy this year," Kaidusch concluded.
