German Retail Sales Rise by 1.8% in March on Food Sales

German Retail Sales Jump by 1.8% in March

On Tuesday (April 30), the German economy is in the spotlight. Retail sales figures warranted investor interest early in the European session.

German retail sales advanced by 1.8% in March after sliding by 1.9% in February. Economists forecast a 1.5% increase.

According to Destatis,

• Food retail sales surged by 3.6% month-on-month in March.
• Non-food retail sales declined by 0.2%.
• Internet and mail order sales also decreased at the end of Q1 2024.
• Compared with March 2023, retail sales were up 0.3%. Retail sales were down 2.7% year-on-year in February.
• Food sales were up 4.1% year-on-year in March.

Retail Sales Impact on the ECB Interest Rate Trajectory

An uptrend in German retail sales could fuel demand-driven inflation. The figures for March could test investor expectations of post-June ECB interest rate cuts. Nevertheless, the ECB may need to consider the pullback in non-food sales.

EUR/USD Reaction to German Retail Sales

Before the retail sales report, the EUR/USD rose to a high of $1.07223 before falling to a low of $1.06951.

However, in response to the retail sales report, the EUR/USD rose to a post-report high of $1.07013 before falling to a low of $1.06971.

On Tuesday (April 30), the EUR/USD was down 0.22% to $1.06975.

Next Up: GDP, Inflation, and the US Economy Pre-Fed

German unemployment and GDP numbers will also need consideration alongside Eurozone inflation and GDP figures. Economists expect the German unemployment rate to remain steady at 5.9% and the German economy to grow by 0.1% in Q1 2024. The German economy contracted by 0.3% in Q4 2023.

Economic indicators for Germany and the Eurozone could influence investor bets on ECB rate cuts beyond June.

For the Eurozone, economists predict the annual core inflation rate to ease from 2.9% to 2.6%. Furthermore, economists expect the Eurozone economy to expand by 0.1% in Q1 2024 after stalling in Q4 2023.

Later in the Tuesday session, the US economic calendar will likely impact investor bets on a September Fed rate cut. US employment cost – wages and US consumer confidence numbers warrant investor attention.

Economists forecast employment cost – wages to increase by 0.9% quarter-on-quarter in Q1 2024 after rising by 0.9% in Q4 2023. Moreover, economists expect the CB Consumer Confidence Index to fall from 104.7 to 104.0 in April.