German retail sales rose almost twice as much as expected in December, helped by a surge in sales of household goods, building materials and clothing ahead of January 1st's hike in sales tax, data showed today.
Retail turnover jumped 2.4 per cent on the month in real and seasonally adjusted terms, according to preliminary Federal Statistics Office figures, beating the mid-range forecast for a gain of 1.3 per cent.
The data exclude sales of vehicles and turnover at petrol stations and are based on figures from six German states accounting for some 74 per cent of total sales.
Germany's ruling coalition raised value-added tax (VAT) by three percentage points to 19 per cent at the start of the year in a move analysts predicted would boost sales at the end of 2006 but crimp spending in the first quarter of 2007.
"The good December figures are not surprising because it is the month which was affected most by spending brought forward before January's sales tax rise," said Matthias Rubisch, an economist at Commerzbank in Frankfurt.
Germany's DIW economic think tank said earlier this month pre-VAT hike spending had probably helped Europe's biggest economy grow by 0.8 per cent in the fourth quarter of 2006 after expansion of 0.6 per cent in the third quarter.
A breakdown of the December retail data indicated that sales of furniture, household goods and building materials rose 9.8 per cent on the year in real terms while clothing, textiles and shoe sales increased 3.1 per cent from December 2005. A Statistics Office official said both categories also recorded strong monthly gains.