German retailers achieved surprisingly lower sales in August, despite consumers no longer being so plagued by inflation. This was 0.8 percent lower than in the previous month, as the Federal Statistical Office announced. Adjusted for inflation (real), there was even a decline of 1.2 percent. This comes as a surprise: Economists surveyed by the Reuters news agency had expected growth of 0.5 percent.
“These are still very difficult times for many retailers,” said the general manager of the HDE industry association, Stefan Genth. In the first eight months of the year, retailers sales were 3.1 percent more than in the same period last year, but in real terms there was a decline of 3.8 percent. This means that customers bought less, but had to spend significantly more money on it. The industry is counting on the fact that inflation, which fell significantly in September, will stimulate customers’ desire to buy in the future, as their purchasing power is likely to increase: the inflation rate fell for the third month in a row and, at 4.5 percent, is at the lowest level since the beginning of the Russian attack to Ukraine a good year and a half ago. “The peak in the development of consumer prices is probably behind us,” said Genth. “The rate of increase in food is also falling significantly.”
Given the continued poor consumer mood, economists say a quick turnaround for the better is questionable. The GfK consumer researchers predict a decline in their barometer by 0.9 points to minus 26.5 points for October. “This means that the chances of a recovery in consumer sentiment this year have probably fallen to zero,” said GfK expert Rolf Bürkl. The chief economist at Hauck Aufhäuser Lamp Privatbank AG, Alexander Krüger, sees it similarly. “Despite the falling inflation rate, the mood among retailers and consumers is poor,” he said. “Consumption will contribute to the recession flap opening further.”
Many economists expect that Europe’s largest economy will shrink in the second half of the year due to the slump in consumption. Food retail sales fell by 1.2 percent in real terms in August compared to the previous month. Sales here are roughly at the level of 2015, as the statisticians emphasized. Internet and mail order sales also recorded a real decline in sales: the decline was significant at 8.7 percent compared to the previous month.