German January retail sales unexpectedly declined 0.6% m/m and 1.3% y/y. Expectations had been for a rise of 0.1% m/m as lower energy prices lifted real disposable income and in line with the pick up in consumer confidence in recent months. December data were revised substantially higher, though, to show a rise of 0.5% m/m, while the initial report pointed to a decline of 0.2% m/m. This highlights once again how unreliable the first release of retail sales data is. However, if confirmed the sharp drop in January sales backs expectations for another negative GDP number in Q1 this year and will only add to arguments for a rate cut at today's council meeting.
