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, the latest data from the German statistics office showed.
Analysts polled by Reuters had predicted a 1.1% increase.
'Growing Hope'
"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.
Business Climate Index
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.
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.
German consumer sentiment is set to rise in May on the back of households' brighter income expectations, continuing a path of recovery that has been slow-going due to uncertainty about the country's economic development, the GfK survey showed last week.
Elsewhere, British consumer sentiment returned to a two-year high this month as households took a more positive view of the economy and their own finances, a long-running survey showed.
