Germany’s retail sales grew in February, albeit at a slower than expected pace, for the first time in three months though decades-high inflation and caution regarding the economic outlook in the backdrop of the Russia-Ukraine war is set to dampen sales in the coming months.
Retail sales rose 0.3 percent from January, when sales were unchanged after revision, preliminary data from Destatis showed Thursday. Economists had forecast 0.5 percent increase in sales for February.
Initially, a 2.0 percent growth was estimated for January. In December, sales declined a revised 2.3 percent.
Retail sales were 4.4 percent higher when compared to the pre-Covid month of February 2020.
Compared to the same month last year, retail sales increased 7.0 percent in February, which was faster than the 6.1 percent increase economists had forecast. In January, sales grew 10.4 percent.
The strong increase in annual terms was partly due to the partial lockdown in February 2021 and the many consumers had brought major purchases forward to 2020 due to the temporary reduction in VAT. These developments particularly affected the non-food retail sector at the beginning of 2021, Destatis said.
Retail sales in the biggest euro area economy are set for a contraction in the first quarter, economists at Daiwa Capital Markets said.
Official data showed this week that Germany’s consumer price inflation jumped to 7.3 percent, its highest level in over four decades in March as the Russia-Ukraine war led to a surge in energy prices.
Consumer confidence is set to weaken sharply in April, hurt significantly by the concerns over the war in Ukraine, the latest survey from GfK showed this week.
Purchasing power is hurt by the escalating inflation that is mainly driven by higher prices of gas, heating oil and gasoline, GfK said.
Elsewhere on Thursday, data from the Federal Labor Agency showed that unemployment decreased a less-than-expected 18,000 in March. The jobless rate was steady at 5.0 percent.
In February, grocery sales edged up 0.1 percent from the previous month, but fell 5.1 percent from a year ago, Destatis figures revealed.
Non-food sales rose 0.9 percent monthly and 16.2 percent annually, mainly due to the base effect.
Within this group, sales of textiles, clothing, shoes and leather goods decreased 0.6 percent from the previous month and those of furniture, household appliances and construction supplies shrunk 0.3 percent.
Online and mail-order sales logged 1.8 percent monthly increase, but fell 7.9 percent from the same month last year.