Weak consumption and falling inflation are weighing on retail - financial experts warn of further stagnation

Weak consumption and falling inflation are weighing on retail - financial experts warn of further stagnation

According to a report by taz.de, retail has seen a decline in sales over the past year, while inflation has fallen to 2.9 percent. The food trade was particularly affected, with sales falling by 6.0 percent after deducting inflation. Sales in the areas of household appliances, furniture and internet and mail order sales have also declined. Despite a nominal increase of 2.3 percent, retail sales were actually worth less than the previous year due to high inflation.

The weakness of consumption is underlined by the director of the Institute for Macroeconomics and Business Cycle Research (IMK), Sebastian Dullien. He explains that people's purchasing power has suffered in recent years due to rising energy and food prices, and people's uncertainty has increased due to the federal government's reactions to the Federal Constitutional Court's ruling. Nevertheless, there is a glimmer of hope as inflation is expected to fall further over the course of the year and wage increases will become more noticeable. The inflation rate was 2.9 percent in January and is expected to be 2.5 percent for 2024 as a whole.

As a financial expert, it is important to recognize that persistently high inflation and subdued consumption can lead to stagnation in the economy. The decline in retail sales is a clear sign that consumer purchasing power is being affected and this may have a negative impact on the economy. In addition, consumer uncertainty may also lead to a slowdown in investment activity, further affecting overall economic performance. It is important that governments and central banks take measures to control inflation and boost consumer confidence to support a sustainable economic recovery.