BERLIN (Reuters) - German retail sales in August saw their sharpest increase in more than three years, far outstripping forecasts to rise 2.5 percent on the previous month in real and nominal terms, the Federal Statistics office reported on Tuesday.
The mid-range forecast of analysts polled by Reuters was for retail sales to rise by a seasonally-adjusted 0.5 percent month-on-month in real terms, but the traditionally volatile indicator came out way higher than even the highest forecasts.
It was the highest month-on-month increase in retail sales in Europe's largest since June 2011, the statistics office said.
"The fundamental outlook for German consumption remains strong," said Berenberg economist Christian Schulz, adding that wage rises and low inflation were boosting purchasing power.
"With incomes rising and job security high, consumption growth should remain one of the pillars for German economic growth in the coming years and also an important driver of demand for export goods from the rest of the Eurozone," he said.
The year-on-year increase of 0.1 percent in real terms was also above a consensus forecast for a slight 0.2 percent fall.
In a breakdown of retail sales levels versus the year-ago period, the strongest increases were in non-food goods such as the internet, pharmaceuticals, cosmetics and medical products and textiles, shoes and leather goods.
(Reporting by Stephen Brown; editing by Erik Kirschbaum)