Stores experience significant decline in sales figures.
Germany's hopes for a spring shopping spree faced a surprising hiccup: Some retailers witnessed a surprising downturn in sales in April. The Federal Statistical Office revealed that their earnings dipped by 1.4% compared to the previous month. After adjusting for inflation, this translates to a 1.2% drop. Economists predicted a minor decline of just 0.1%.
In the first quarter, private consumption played a negative role in the economy. Although the gross domestic product improved by 0.2% from January to March compared to the preceding quarter, consumption decreased by 0.4%. Despite falling inflation and increasing real wages, people spent less on groceries and clothing.
The decline in sales affected the food retailers the most significantly. In real terms, the turnover in food retailing fell by 3.7% in April. Conversely, the non-food trade gained 0.2% and the online and mail order trade surged by 2.9%.
The upcoming European Football Championship, held in Germany from June 14 to July 14, might help improve the consumers' mood. The Bundesbank believes that the tournament could brighten the currently subdued sentiment. However, it doesn't anticipate a spending spree. "Although the current restrained mood in Germany regarding consumption may brighten up more quickly in the context of the EM than we expect based on the available indicators, we're not predicting a consumption extravaganza," said the Bundesbank. Similarly, the German Retail Association (HDE) anticipates a positive impact from the tournament, estimating additional sales of 3.8 billion euros.
The mood of German consumers is currently as bleak as it's been in two years. However, the Consumer Climate Barometer for June, calculated by market researchers GfK and NIM from a survey of 2000 consumers, remains firmly in negative territory with a score of -20.9 points.
