Retail trade: the mood to buy has fallen rapidly

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Bad times for retail. Consumption has fallen sharply, even in e-commerce, which has so far benefited from the pandemic. It seems that the bottom has not yet been reached.

German retailers ended the first half of the year with the sharpest drop in sales in 28 years. The reasons for this were high inflation, the corona crisis and the Ukraine war.

In June, sales were 8.8 percent lower than a year earlier, adjusted for inflation (real), according to the Federal Statistical Office announced Monday.

“This is the largest decline compared to the same month last year since the beginning of the time series in 1994,” it said. In nominal terms – ie not price-adjusted – sales only fell by 0.8 percent.

“The difference between the nominal and real results reflects the high price increases in the retail trade, which are having a noticeable impact on the consumer climate,” explained the statisticians.

It could get worse

Economists predict tough times for retail to continue. “That wasn't the last piece of bad consumer news,” said the chief economist at Hauck Aufhäuser Lampe Privatbank AG, Alexander Krüger. “Because of the miserable consumer mood, consumption is likely to continue to fall from now on. Consumers are struggling with serious real income losses.” The gas surcharge will also curtail consumer wishes this year. “The low point in consumption is yet to come,” Krüger therefore expects.

Internet retail is also down

There was also a decline in sales compared to the previous month: Adjusted for inflation, revenue fell by 1.6 percent compared to May. That comes as a surprise: economists had expected slight growth of 0.2 percent here.

Consumers spent 1.6 percent less on food. “The decline is probably mainly due to the rise in food prices,” according to the statisticians. They increased by almost twelve percent compared to June 2021. The fact that people went to restaurants more often could also have had a negative impact on food retail – sales in the catering trade increased by 8.6 percent in May compared to the previous month.

Trade in textiles, Clothing, shoes and leather goods were not able to continue the positive trend of the year to date and in June were down 5.4 percent on the previous month.

Internet trade, which had boomed during the corona pandemic, was also up significantly in the red. With a decline of 15.1 percent compared to June 2021, the sharpest drop within a year since 1994 was reported.

iw/bea (dpa, rtr, afp)