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Weak Start To 2024 For Retail Sales Points To Struggling Consumption


German retail sales were slightly weaker in January than expected at -0.4% M/M (seasonally- and calendar-adjusted, vs +0.5% cons), though the soft outturn partially reflected a base effect from a large upward revision to December (-0.5% prior, revised from -1.6%). The Y/Y print (which is calculated on an ex-auto sales basis) was basically in line at -1.6% Y/Y (-1.7% cons; -3.4% prior, revised from -4.4%).

  • Overall, the data - which are in real terms - suggests that conditions in German retail remain very weak though are not deteriorating rapidly. For perspective, the yearly rate has printed flat or negative for 7 consecutive months now and 16 of the past 18 - and the weakness continues to be very broad based across the major retail categories.
  • The yearly decline was driven by non-food items, which printed -2.3% Y/Y (vs -4.4% prior). Sales in the furnishings, household appliances and building supplies category continued their particularly strong decline, at -7.7% Y/Y (vs -9.2% prior) after printing in negative territory in every month of 2023.
  • Within the non-food sector, pharmacies, cosmetic, pharmaceutical and medical products saw the strongest developments at +1.5% Y/Y (vs -2.4% prior).
  • Food items came in at -0.4% Y/Y (vs -1.5% prior), driven lower by speciality food retail (-0.8% Y/Y vs -4.0% prior) as opposed to conventional food retail (supermarkets etc., -0.3% Y/Y vs -1.3% prior), suggesting a shift towards lower-cost retail options might be ongoing in Germany.
  • The upward revisions of December data slightly improve the picture of weak 2023 Christmas sales, and come after the stronger-than-expected private consumption data from the Q4 2023 GDP release (priv. cons. +0.2pp positive contribution and upward revision for Q3, from slightly negative to a +0.1pp contribution).

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