Germany's retail sales are showing good signs heading into the height of the Christmas trading period, according to retailer association BAG's interim report.

BAG said that shoppers are now back into shopping mode, particularly when it comes to goods such as winter clothing, perfumes, and books.

There is, however, reason to be cautious, BAG said. Anticipated economic changes introduced by the new federal government may hamper this Christmas's trading from matching last year's.