Germany experiences lower food prices compared to the broader European Union market.
In no other EU nation do consumers allocate a smaller chunk of their income to food, health, and care-related expenditures than they do in Germany. Despite a surge in prices due to high inflation, these expenses represented only 13.4% of overall consumer spending last year, lower than in any other of the 26 EU countries, as per a study conducted by market research firm NIQ.
NIQ retail specialist Filip Vojtech pointed out that Germany's high average incomes and cutthroat competition within the retail sector keep food prices relatively low, despite the recent price hikes.
Consumers have increasingly become price-conscious and are making the most of offers. As a result, Germany saw the largest increase in promotional purchases among Western European nations, clocking in at a 14% rise, according to NIQ.
Less than a quarter of euros go towards retail in Germany
Germany also ranks last when considering overall store-related spending. In 2023, only around 25% of Euros were allocated to retail in Germany, while the average for the EU as a whole was one-third, and close to half in Eastern European countries like Hungary and Bulgaria.
Higher purchasing power in German households leads to a smaller portion of income being spent on necessities like food, clothing, and other goods, Vojtech explained. However, living and energy costs are higher, leading to larger spending on services and leisure activities, as well as savings and financial investments.
The retail sector's share in private consumption decreased once again in the EU in 2023, according to market research. This downturn is attributed to a return to normal consumer behavior, NIQ study leader Philipp Willroth suggested. During the COVID-19 pandemic, people primarily spent their funds on retail as cultural activities, events, and travel were frequently ill-advised. However, as Europe is now experiencing rebounding demand, consumers are eager to engage in experiences and travel more.
The low allocation of funds to retail in Germany, only around 25%, can be attributed to the high average incomes in German households. Despite the economy's strong performance, the economy as a whole may still struggle to prioritize retail expenditures due to higher living and energy costs.
