The consumerism of the Germans has reached a minimum. In June, the retail sector reported the sharpest drop in sales since 1994. Further restraint is to be expected in the coming months. Consumers were reluctant to make purchases in view of the high inflation rate.
High inflation is depressing consumption. In June, price-adjusted retail sales fell by 8.8 percent compared to the previous year, which was the largest decline compared to the same month last year since the beginning of the time series in 1994, as reported by the Federal Statistical Office. Sales of foodstuffs fell to their lowest level since June 2016. The German Retail Association expects consumer restraint to continue in the coming months.
The statisticians in Wiesbaden explained on Monday that the decline in sales of food was probably mainly due to the rise in food prices. Prices 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.
Sales of textiles, clothing, shoes and leather goods, which had almost reached pre-crisis levels by May, fell again in June, price-adjusted, by 5.4 percent compared to April. Compared to June 2019, sales were 13.6 percent below the pre-crisis level. Internet and mail order business also posted lower sales in June than in the previous month (minus 3.8 percent). Compared to June 2019 before the corona pandemic, however, sales were 22.3 percent higher.
With the introduction of the tank discount, sales at petrol stations rose by 6.4 percent compared to May, the statisticians said. However, they were still 8.0 percent below the level of June 2021. The consumption barometer determined by the German Retail Association (HDE) fell to a new all-time low in August. The reason for this is in particular the uncertainty in the energy supply and the development of energy prices, the association explained.
Consumers were reluctant to make purchases in view of the persistently high rate of inflation and the unforeseeable amount of back payments for ancillary costs. Their own income expectations have deteriorated compared to July. “The consumption boom that was still possible a few months ago” has failed, explained the HDE.
The further development of private consumption is uncertain in view of the ongoing crises. A reluctance to consume is to be expected in the coming weeks. The HDE surveys around 1,600 people every month for its consumption barometer – the index provides information about the expected mood in the next three months.