BERLIN: Retail sales in Germany have fallen for the second month in row and, with consumer confidence wobbling, the signs are of an uneven economic recovery.

Latest figures from the Federal Statistics Office indicated that sales, adjusted for inflation and seasonal variations, dropped 1.4% in July, following a 0.8% dip in June.

Analysts pointed to the effects of rising food prices – food price inflation stood at 5.7% in July – as a factor limiting growth.

"Higher food prices tend to lead to a bit of downward pressure on consumption," Christian Schulz, senior economist at Berenberg Bank in London, told Bloomberg.

"Everything else looks positive. If you look at any business survey, there's acceleration, not deceleration, of growth in Germany," he added.

Taking a longer perspective tended to support this view. Overall retail sales were up 2.3% on the same period a year earlier, with revenues from food items, beverages and tobacco seeing the strongest increase.

Book and jewellery sales, however, declined significantly over the same period.

Low interest rates and a fear of inflation eroding purchasing power were cited by market research group GfK as reasons for an apparent willingness of German consumers to make big investments in, for example, real estate.

GfK also noted that an upward trend in consumer confidence had halted. "However this does not mean a turnaround in the overall trend and the start of a slide," it said, in comments reported by Reuters.

Its forward-looking sentiment indicator, based on a survey of around 2,000 people, fell to 6.9 going into September from 7.0 in the previous month, which had been the highest level since before the global financial crisis.

"Consumers clearly think the German economy is in a recovery but this will be rather moderate in the coming months and smaller setbacks cannot be excluded," GfK stated.

Data sourced from Bloomberg, Deutsche Welle, Reuters; additional content by Warc staff