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Christmas fails to bring holiday cheer for German retailers

December 21, 2023

Despite improvement in inflation rates, shoppers in Germany are exercising caution amid looming budget cuts in 2024.

https://p.dw.com/p/4aQaB
A man walking in a Christmas market
Sellers of toys and consumer electronics are more pessimistic about their sales in the coming monthsImage: F.Boillot/snapshot/imago images

The festive holiday season has not brought cheer to small-business owners and retail shopkeepers in Germany as Christmas shopping did not offer a boost, according to a survey published on Thursday.

German retailers remain gloomy about their earning prospects in the upcoming months, too, according to the report released by the Munich-based Ifo Institute.

"For many retailers, business in the first weeks of the holiday season wasn't as good as they had hoped," Ifo's Patrick Höppner said.

How much should a trip to the Christmas market cost?

Sellers of toys and consumer electronics, as well as of electrical goods and electronic household appliances, were more pessimistic about their business prospects in December than they were in November.

These products are commonly sold during the Christmas season and make up a significant chunk of the retailers' annual sales.

The economic institute said its business situation indicator for retail slumped to -12.1 in the final month of the year, down from -8.8 in November.

Buyers wary of budget cuts, rise in inflation

Improving its inflation rates from last year, Germany — the biggest economy in Europe — has seen a steady decline in inflation this year. The inflation rate in November stood at 2.3% compared to a peak of 11.6% in October 2022.

However, the chances of a bump in inflation rates are still rife as the government plans to cut subsidies and introduce new taxation rules in the 2024 budget.

"Customers continue to exercise noticeable restraint, and this is likely to give retailers a difficult start to 2024," Hoeppner said.

mfi/sms (Reuters, AFP)

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