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German retail sales fell by 0.2% in August, driven by a 2.0% drop in online and mail-order purchases and a 1.0% decline in non-food retail. Analysts had expected growth, but a revised 0.5% fall in July reflects a continued cooling in consumer activity. Thomas Gitzel, chief economist at VP Bank, attributed the slowdown to cautious household spending amid economic uncertainty. Despite monthly declines, retail sales were up 1.8% year-on-year, showing that overall consumer demand remains steady, though short-term confidence and spending patterns are influenced by caution and concerns about the broader economic situation.
German retail sales declined in August, reflecting a slowdown in consumer spending across key sectors, the federal statistics office reported. Overall, retail sales fell by 0.2% in real terms compared with the previous month, surprising analysts who had anticipated a 0.6% increase. This follows a downward revision of July's figures, which showed a 0.5% decrease, indicating that consumer activity has been weaker than initially expected in recent months. Advertisement
The drop in sales was led by a decline in online and mail-order purchases, which fell by 2.0% in August. Non-food retail also experienced a 1.0% decrease, contributing to the overall slowdown. Thomas Gitzel, chief economist at VP Bank, said the mid-summer buying mood remained subdued, adding that many households are saving cautiously due to concerns about the economic situation. He explained that uncertainty over employment, inflation, and broader economic conditions is weighing on consumer confidence and influencing spending habits.
While monthly figures showed a decline, retail sales in August were 1.8% higher than the same period last year, signaling moderate annual growth in consumer spending. The contrast between month-on-month declines and year-on-year gains suggests that although consumers remain cautious in the short term, overall spending continues to rise over a longer horizon.
The August figures also reflect broader trends in German consumption patterns. Online and mail-order shopping, which had previously supported retail growth, now appears to be losing momentum, and non-food sectors are feeling the impact of more careful household budgets. Economists note that this cautious approach is not limited to Germany, as similar trends are being observed across several European economies where inflation concerns and economic uncertainties are influencing consumer behavior.
Source Reuters
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