German retailers expect weaker sales and higher prices

The mood in German retail deteriorated in February. The ifo business climate index fell to minus 27.7 points from minus 24.1 in January, with retailers giving a particularly poor assessment of their current situation.

Expectations for the coming months also remained weak. According to ifo expert Patrick Höppner, the sector entered the new year cautiously. He warned that if geopolitical risks persist and energy prices rise, consumer sentiment could weaken further and place additional pressure on retailers.

In February, sentiment deteriorated in several segments, particularly in furniture and clothing sales. By contrast, food retailers and car dealerships reported a slight improvement. Companies responded before the conflict in Iran escalated at the end of the month.

Overall, according to the ifo institute, trade remains in worse shape than other parts of the economy. Both wholesalers and retailers are more pessimistic about their current situation and outlook than industry, services and construction.

In addition, slightly more retailers plan to raise prices in the coming months, particularly furniture and food retailers. At the same time, the sector is cutting jobs rather than hiring new staff, which has slightly eased pressure caused by the shortage of workers.

(lud)