In February, retail turnover increased by 0.8 percent compared to January in real terms, continuing the upward trend observed in the revised January data, which showed a 0.7 percent real sales growth. On a year-over-year basis, real retail growth accelerated to 4.9 percent, significantly outpacing January's revised 3.3 percent growth, indicating strengthening market momentum.

Food retail experienced a moderate monthly rise of 0.8 percent (in real terms), while year-over-year figures indicate a broader inflationary impact, with a 3.3 percent real increase and 5.7 percent nominal increase. The non-food segment posted a 5.2 percent annual real increase, reflecting recovering consumer interest in discretionary spending.

The standout performer was online and mail-order retail, which surged by 15.4 percent in real terms year-over-yearunderscoring a substantial shift in consumer behavior towards e-commerce. In the coming months retail sales data could provide clues as to whether consumers are accelerating purchases in anticipation of tariffs.

Overall, the report reflects a robust rebound in retail activity, buoyed by seasonal adjustments and improving consumer confidence. Retailers, particularly in digital channels, appear well-positioned to capitalise on this momentum through 2025. This latest update takes the RPI to minus 16 and the RPI-P to minus 10, indicating that economic activities are slightly lagging expectations of the German economy.

The consensus looks for another muted rise of 0.1 percent for February after an uptick of 0.2 percent in January.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision but much greater detail is provided in the following month's release.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report. However, by excluding the services sector, changes in retail sales data can differ significantly from those in total household spending.