BERLIN, Nov. 13 (Xinhua) -- Retailers across Germany expect modest Christmas sales gains this year, the German Retail Federation (HDE) said on Monday. Adjusted for inflation, sales in November and December are predicted to fall 5.5 percent year-on-year.
With a 4 percent drop in sales in real terms, online retail is "also unable to provide any major impetus" to Christmas business, which is the strongest sales period of the year for many retail companies, the HDE said.
On average, Germans are planning to spend 250 euros (267.50 U.S. dollars) per capita on Christmas gifts, two euros less than last year, according to a representative survey published by consulting firm Ernst and Young (EY) on Monday. This is the lowest figure since 2014.
"The rapid price increases have made life more expensive and restricted financial leeway -- gift budgets are suffering as a result," EY consumer goods expert Michael Renz said. "The situation is becoming increasingly difficult for retailers."
Although inflation in Germany fell significantly for the second month in a row in October to 3.8 percent, the rate remains high in a medium and longer-term comparison, according to the Federal Statistical Office (Destatis).
"More and more consumers are having to turn over every euro twice," Renz said. "Retailers are likely to try to counteract this with price cuts and discount campaigns. However, this is eating into margins and is ultimately not a sustainable model for success."
According to the Nuremberg Institute for Market Decisions (NIM), recovery in consumer sentiment remains "a long way off." Due to weak purchasing power, "private consumption will not be able to support the economy this year," NIM expert Rolf Buerkl said in late October.
Europe's largest economy is on the brink of a recession. After stagnation earlier this year, Germany's gross domestic product (GDP) in the third quarter (Q3) of 2023 declined by 0.1 percent compared to the previous quarter, according to Destatis.
In line with leading economic institutes, the German government lowered its annual economic growth forecast in mid-October and it now expects a 0.4 percent recession in 2023. Next year, the economy is predicted to recover with growth of 1.3 percent. (1 euro = 1.07 U.S. dollars)
