Germany's retail sector showed that compared with June, overall retail turnover dropped by 1.5 percent in real terms, reversing the previous month's upward revision of 1.0 percent. The decline was driven mainly by weaker food sales, which fell by 1.8 percent month-over-month, and a contraction in non-food trade (minus 0.7 percent). Online and mail-order businesses were hit hardest, posting a 3.8 percent fall after months of strong momentum.

Despite these setbacks, year-over-year comparisons painted a more positive picture. Total sales were 1.9 percent higher in real terms than in July 2024, with non-food retailing recording robust annual growth of 3.5 percent and online trade surging by nearly 14 percent. Food sales, however, were flat in real terms, suggesting ongoing pressure on household budgets amid shifting consumption patterns.

Overall, the figures underline the fragile balance in consumer spending: short-term volatility, particularly in food and online sectors, contrasts with steady annual gains. This suggests that while inflation-adjusted demand is holding up compared to last year, momentum in mid-2025 has slowed, leaving the retail sector sensitive to broader economic headwinds. This latest update brings the RPI to minus 37 and the RPI-P to minus 47, indicating that economic activities are behind the expectations for the German economy.

Sales expected flat on the month in July after surging by 1.0 percent on the month in June.

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.