German Retail Sales Fall More Than Forecast, Price Expectations Rise

(RTTNews) - Retail sales in Germany declined more than expected in April, largely led by a slump in sales of food, while a survey showed that more companies plan to raise prices in the coming months.

On a calendar and seasonally adjusted basis, retail sales slumped 1.2 percent from March, when they grew an upwardly revised 2.6 percent, preliminary data from the statistical office Destatis showed Friday. Economists had forecast a 0.2 percent fall. Food sales plunged 3.7 percent from the previous month, while non-food sales rose 0.2 percent. On a year-on-year basis, retail sales fell 0.6 percent in April.

E-commerce and mail order sales grew 2.9 percent from the previous month, but fell 0.3 percent from a year ago. Elsewhere on Friday, the ifo institute said price expectations of German companies rose to 16.2 points in May from 15.2 points in April. More companies in manufacturing and wholesale plan to raise their prices than in the previous month, while expectations sunk in the consumer-related industries. "This means inflation is likely to fall again in the coming months," Timo Wollmershauser, head of forecasts at ifo, said.

"In August, it should drop below 2 percent for the first time since March 2021."

A survey data from the market research group GfK showed on Wednesday that the German consumer confidence is set to improve in June on rising income and economic expectations.

However, the survey also showed that the propensity to buy failed to gain any benefit from the increasing economic and income expectations.

Higher prices for food and energy as well as the ongoing uncertainty forced households to set aside financial resources for future rather than spending, GfK said.

Official data released on Thursday showed that the German harmonized inflation climbed to 2.8 percent in May from 2.4 percent in April, underpinned by an acceleration in services inflation.

Core inflation that excludes food and energy prices was steady at 3.0 percent. Energy prices continued to decline, while food prices rose for a second straight month.

The ECB has signaled that it will reduce interest rates in June, but recent data suggest there is limited scope for any easing beyond that this year.