Inflation: Rising prices bring record retail sales

Rising prices lifted retail sales in Germany to record levels last year.

Inflation: Rising prices bring record retail sales

Rising prices lifted retail sales in Germany to record levels last year. Nominally, the revenues were 8.2 percent higher than the previous record year 2021, as the Federal Statistical Office extrapolated on the basis of the data up to and including November 2022. But if you factor out the price increases, the Wiesbaden authority's estimate published on Friday shows a minus of 0.3 percent compared to the previous year.

This explains the low level of confidence in the industry. "Our current trend survey in retail shows that the majority of retailers do not expect sales to recover in 2023," said the chief executive of the German Retail Association (HDE), Stefan Genth, recently to the German Press Agency.

Because of the Ukraine war and its economic consequences, there is great uncertainty among consumers and retailers, Genth explained: "That's why we are approaching 2023 with very modest expectations - more with concern than with a positive outlook."

Only at Christmas a little more desire to buy

Consumers are particularly reluctant to make purchases that are not absolutely necessary for everyday life. According to HDE estimates, thousands of business owners gave up boutiques, shoe shops, sports shops and perfumeries last year.

For months, sharply increased prices for energy and food have been slowing down private consumption. In a year characterized by high inflation and sluggish consumption, the desire to buy returned among people in Germany in good time for Christmas, as the consumption researchers at Nuremberg-based GfK recently determined. However, the recovery of the consumer climate is "still on shaky ground", puts GfK consumer expert Rolf Bürkl into perspective.

The Christmas business that began in November gave the industry a boost, as figures from the Federal Office show: According to preliminary results, retail companies in Germany increased their prices by 1.1 percent (in real terms) and 1.3 percent in nominal terms in that month, adjusted for calendar and seasonal adjustments and adjusted for price increases than in October 2022. Compared to November 2021, sales fell by 5.9 percent in real terms, but rose by 4.8 percent in nominal terms. The Wiesbaden statisticians explain the difference between these two values ​​with high price increases.

Online trade is weakening

There was a significant decline in sales over the year in mail order and online retail, which had boomed during the Corona crisis. According to calculations by the Federal Office, there was a real (minus 8.1 percent) and nominal (minus 3.1 percent) minus. From 2020 to 2021, online sales had shot up by 12.3 percent in real terms.

For the industry as a whole, the HDE, which looks at the retail trade excluding the car trade, petrol stations, pharmacies and fuel trade, forecast in July that nominal sales will increase by three percent in 2022 to a good 607 billion euros. Adjusted for inflation, however, a decline of two percent compared to the previous year is to be expected.