Survey results published by the Ifo economic institute showed sentiment among German retailers worsened at the end of the year, while expectations for the coming months remained gloomy.
The indicator of the business situation in retail trade fell to -12.1 points in December from -8.8 points in November. The drop was due to the fact that for many retailers, business in the first weeks of the holiday season wasn't as good as they had hoped. Meanwhile, retailers' expectations for the coming months have deteriorated further and remain mostly pessimistic.
The report showed that sellers of toys and consumer electronics as well as of electrical goods and electronic household appliances are more pessimistic about their business situation compared to November. In these areas, Christmas sales make up a particularly large proportion of the annual total.
Consumer inflation in Germany has been slowing steadily this year and there are some signs of improvement in consumer sentiment. However, inflation may rise again at the beginning of the new year, as the more fiscally restrained budget for 2024 includes some subsidy cuts and new tax measures.
"Customers continue to exercise noticeable restraint, and this is likely to give retailers a difficult start to 2024," Ifo institute said.