German retail sales rose more than expected in March, pointing to a recovery in consumption at the end of the month and boding well for the overall economy.
Retail sales increased by 1.8% compared to the previous month, data from the German statistics office showed on Tuesday.
Analysts polled by Reuters had predicted a 1.1% increase.
"The increase in sales is stopping the downward trend for now," said Alexander Krueger, chief economist at Hauck Aufhaeuser Lamp Privatbank. "There is growing hope that the approaching spring will further spur consumption."
Higher prices took their toll on consumption last year, but it is now expected to contribute significant growth momentum to the economy this year as real wages are seen rising in a resilient labour market.
Food sales rose 3.6% on the month in adjusted terms, while sales in the non-food retail sector fell by 0.2% on the month.
The Ifo institute's business climate index for retail sector, one of Germany's key economic barometers, also picked up in April, the institute said on Tuesday.
Assessments of the current business situation improved significantly, with retailers' business expectations also becoming more optimistic, the index showed.
"Consumer-related businesses are likely to support the overall economy in 2024," said Ifo's expert Patrick Hoeppner.
