German retail sales fall unexpectedly in May

German retail sales unexpectedly fell by 1.6% in May compared with the previous month, statistics office data showed on Monday, dampening hopes for strong growth in the second quarter for Europe's economic powerhouse.

Analysts polled by Reuters had predicted a 0.5% increase, after sales declined by 0.6% in April.

While there could be some recovery in June, a large and sustained jump in consumption is not expected for the time being, said Hauck Aufhaeuser Lampe economist Alexander Krueger.

That could spell problems for economic growth in the second quarter after unexpectedly robust growth in the first, thanks in part to consumer spending.

"The strong growth seen in the first quarter will not be repeated," said VP Bank economist Thomas Gitzel.

"The German economy will have to scale back its ambitions in the second quarter."

Consumer sentiment in Germany dipped to minus 20.3 points heading into July in the most recent survey conducted by the GfK market research institute and the Nuremberg Institute for Market Decisions (NIM).

That survey of around 2,000 people found an increased willingness to save - due to continuing uncertainty - was counteracting positive momentum in income prospects.

The dip in retail sales comes as national inflation data for June is set to be published later on Monday, with analysts predicting a slight rise to 2.2% from 2.1% a month earlier.