BERLIN (Reuters) - German retail sales rose more than expected on the month in February but unexpectedly dropped on the year, data showed on Friday, sending mixed signals about the health of this sector of Europe's largest economy.
The volatile indicator, which is often subject to revision, showed retail sales increased by 1.8 percent on the month in real terms, the Federal Statistics Office said. That beat expectations for a 0.7 percent rise and followed a downwardly revised drop of 1.0 percent in January.
On the year, shops sold 2.1 percent less in February, confounding forecasts for a 0.3 percent increase in sales.
Consumption has become a key growth driver for the German economy, which was traditionally propelled by exports, as Germans revel in record-high employment, increased job security, rising real wages and ultra-low borrowing costs.
The data came after a GfK survey showed German consumer sentiment unexpectedly fell to its lowest level in five months going into April, partly due to people's concerns that rising inflation will erode their purchasing power.
A breakdown of the year-on-year data showed sharp drops in sales of food, drinks and tobacco as well as clothing, shoes and other items such as books and jewellery.
Reporting by Michelle Martin; Editing by Paul Carrel