German retail sales fall in October as inflation takes hold

BERLIN (Reuters) - German retail sales fell more-than-expected in October, data showed on Thursday, as inflation had consumers holding back on non-essential purchases at the start of the fourth quarter.

Retail sales were down 2.8% on the month in October, a further drop than the 0.6% dip in price-adjusted terms expected by analysts polled by Reuters.

Compared with October 2021, retail sales were down 5.0%.

"The retail sales figures for October give rise to the suspicion that the fourth quarter indeed marks the much-cited beginning of the winter recession," said VP Bank chief economist Thomas Gitzel, who added that the 4.5% month-on-month drop in non-food retail in October showed consumers were forgoing non-essential items in the face of high inflation rates.

Germany's HDE retail association is forecasting the strongest slump in Christmas sales since 2007, with retail sales in the crucial November-December period seen dropping by 4% year-on-year on a price-adjusted basis.

The German economy grew by 0.4% quarter-on-quarter in the third quarter on the back of consumer spending, despite rising inflation rates that hit the double digits in September.

(Writing by Miranda Murray; Editing by Paul Carrel)