Berlin - German retail sales posted a surprise fall in December, the Federal Statistics Office said Tuesday amid rising unemployment and a deepening sense of gloom about the prospects for Europe's biggest economy.

Month-on-month retail sales slipped by 0.2 per cent, the Wiesbaden-based statistics office said.

Analysts had forecast a 0.5-per-cent rise in December.

At the same time, the statistics office also revised downwards the previously reported 0.7-per-cent increase in November to a 0.1-per- cent decline.

The fall in retail sales came despite signs that falling oil prices were helping to drive down inflation.

However, German unemployment posted its third consecutive monthly rise in January, resulting in seasonally adjusted jobless rate increase to 7.8 per cent.

On an annual basis, retail sales slipped 0.3 per cent in real terms compared to a forecast 0.5-per-cent increase. In nominal terms, retail sales levels edged up 0.6 per cent.

In 2008, retail sales dropped 0.4 per cent in real terms and rose 2.1 per cent in nominal terms compared to 2007, the statistics office said. (dpa)