Retail sales decreased 3.4% from June, according to provisional figures from the Federal Statistical Office (Destatis), Anadolu Agency reported.
Markets expected a monthly rise of 0.4% in July.
Petrol station sales plunged 9.1% after a fuel discount in effect during May and June expired.
Compared with July 2025, petrol station sales dropped 9.3%.
Weakness was also evident in the non-food retail sector, where sales fell 4.8% from the previous month.
Online and mail-order sales declined 5.6% month-on-month and 0.8% from a year earlier.
Real sales of food products decreased more moderately, falling 0.8% from June and 0.3% compared with July 2025.
Overall retail sales were 2.5% lower than a year earlier.
Destatis revised the real monthly change for June to 0% from a previously reported decline of 0.7%.