Germany July retail sales -3.4% vs +0.4% m/m expected

German retail sales experienced a sharp contraction in July, falling 3.4% month-over-month, drastically missing consensus expectations for a 0.4% increase. On an annual basis, retail sales dropped 2.5% in real terms, marking a steep deterioration from the 0.6% growth observed in June, although June's monthly reading was revised upward from -0.7% to 0.0%. The widespread pullback in consumer spending was heavily impacted by the expiration of fuel discounts that had been implemented during May and June. As a result, petrol station sales plummeted 9.1% month-over-month in real terms. The slowdown was not confined to automotive fuel, as non-food retailing fell by 4.8% and food sales declined 0.8% in real terms. This disappointing economic report underscores weakening consumer demand and highlights the persistent macroeconomic headwinds facing Europe's largest economy at the start of the third quarter. The broader weakness in domestic spending poses a negative headwind for German corporate revenue and the performance of the Germany 40 index.