Retail sales slump in Germany as inflation rises
According to preliminary data from the Federal Statistical Office (Destatis), German retail enterprises recorded a real turnover decline of 1.2 per cent month-on-month and 0.6 per cent compared to the same month of the previous year in April 2024.
The latest data published by the German office Destatis indicate a weakening of the economic situation in German retail trade in April this year. After accounting for seasonal and calendar factors, retail sales fell by 1.2 per cent compared to March 2024. In nominal terms, turnover shrank by 1.4 per cent month-on-month without adjustment for price changes.
Weaker results were also observed in the year-over-year comparison. In April 2024, retail sales in Germany were 0.6 per cent lower in real terms than in the same month in 2023. There was a 1.0 per cent increase in turnover, but after accounting for inflation, the real value of sales was lower than a year ago.
Declines in food trade, increases in the non-food segment
Destatis reports that retail food sales in April 2024 decreased in real terms by 3.7 percent, nominally by 3.4 percent compared to March. Year-on-year, turnover in this segment fell in real terms by 1.5 per cent, while nominally, a slight increase of 0.4 per cent was recorded.
The situation was better in non-food retail. After seasonal and calendar adjustments, real sales in this sector increased by 0.2 per cent month-on-month, although there was still a year-on-year decline of 0.6 per cent. The online and mail-ordered trade was performed well, where real turnover increased by 2.9 per cent month-on-month, with their level only slightly (by 0.3 per cent) lower than a year ago.
Different results across industries
The Destatis report also provides data on changes in retail sales across different industries from January to April 2024 compared to the same period in 2023. It shows that real turnover growth was recorded by pharmacies and stores with cosmetics and medical products (+3.3 per cent) and fuel stations (+1.3 per cent).
On the other hand, declines were recorded in stores selling textiles, clothing, footwear, and leather goods (-0.4 per cent) and in household, appliance, and construction material trade (-4.1 per cent). Overall, retail sales in Germany in the first four months of the current year increased in real terms by 0.2 per cent year-on-year and nominally by 2.3 per cent.
The Federal Statistical Office notes that during the COVID-19 pandemic and the war in Ukraine, the results of month-to-month and year-on-year sales comparisons can differ significantly. Furthermore, due to the applied seasonality adjustment methodology, the rate of changes for aggregated categories may not equal the sum of their components’ changes.
Destatis also emphasizes that in analyzing the economic situation, it is essential to compare seasonally and calendar-adjusted data every month, which allows for assessing short-term trends. On the other hand, year-on-year comparisons are used to observe long-term changes. Nevertheless, the current volatility of results makes it necessary to evaluate the situation in trade with caution.
Germany recorded an increase in inflation
Earlier, we received another significant reading. As analysts at PKO BP wrote in their morning commentary, according to preliminary estimates, CPI inflation in Germany increased in May to 2.4 per cent from 2.2 per cent in April.
On a monthly basis, prices rose by 0.1 per cent. "HICP inflation slightly surprised on the upside – the consensus had assumed an increase in May to 2.7 per cent year-on-year (from 2.4 per cent year-on-year in April), while the preliminary reading indicated 2.8 per cent year-on-year. Core inflation (excluding food and energy) stabilized at 3.0 percent year-on-year. Energy prices were 1.1 per cent lower than a year ago, despite their earlier thaw and the introduction (since January 2024) of the CO2 fee," the analysts wrote.
They also point out that food prices increased by 0.6 per cent year-on-year, significantly weaker than the overall CPI inflation basket. The price dynamics of goods fell to 1.0 per cent year-on-year, while inflation in services increased to 3.9 per cent year-on-year.
