FRANKFURT - Retail sales in Germany fell sharply in January, disappointing analysts' forecasts for a modest rise, official data showed on Friday.

Retail sales dropped by 1.6 per cent in January compared with December in price, seasonally and calendar-adjusted terms, according to provisional figures by the federal statistics office Destatis.

Analysts surveyed by Dow Jones Newswires had expected an increase of 0.3 per cent for January.

On a 12-month basis, however, retail sales rose by 1.6 per cent in January, the statisticians calculated.

Monthly retail sales data are volatile and subject to frequent revision.

According to the closely-watched GfK survey, consumer confidence in Germany hit its highest level in a year this month, fuelled by households' rising income expectations despite the eurozone debt crisis.