"On the basis of sound fundamentals such as the resilient labor market, rising wages and low inflation, German consumers have become more confident"
- Christian Schulz, an economist at Berenberg Bank
Sales at German retailers surged more than initially was expected in May, another sign that a recovery Europe's powerhouse is gathering momentum, the Federal Statistics Office said Friday. Retail sales adjusted for inflation and seasonal swings jumped 0.8% from April, when they dropped 0.1%, and beating analysts' expectations of a 0.4% gain. On an annual basis sales grew by 0.4% from an upwardly revised 2.7% increase recorded in the prior month.
Meanwhile, the cost of living in Europe's biggest economy rose again in June to near the ECB's target rate for the Eurozone driven by food and energy prices. Annual inflation, a closely watched indicator in Germany, came in at 1.8%, up from 1.5% in May, overshooting economists' forecast of 1.7%. German inflation has been below the central bank's 2% target for all of the year to date, after exceeding it for much of 2012.
The nation's unemployment rate tumbled unexpectedly in June, while business confidence and ZEW's investor sentiment improved as well, decreasing pressure on Chancellor Angela Merkel, who is facing elections in September.
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