German Retail Sales Slide by 1.2% in April as Food Sales Slump

On Friday (May 31), the German economy was in the spotlight, with retail sales numbers attracting investor attention early in the European session.

German Retail Sales

German retail sales tumbled 1.2% in April after surging 1.8% in March. Economists forecast retail sales to decline by 0.1%.

According to Destatis,

• Food retail sales slumped by 3.7% in April 2024.
• Non-food retail product sales increased by 0.2% in April 2024.
• E-commerce and mail-order sales jumped by 2.9%.

Retail sales were down 0.6% year-on-year in April after rising 0.3% in March. Economists expected retail sales to fall by 1.0%.

Impact on ECB Monetary Policy

The retail sales numbers aligned with the recent German GfK Consumer Climate Report. Despite a sharp fall in the willingness to save, the willingness to buy remained subdued, signaling a weak consumption outlook.

For the ECB, downward trends in consumer spending could dampen demand-driven inflation and support post-June ECB interest rate cuts.

Nevertheless, inflation remains the focal point. Later in the European session, Eurozone inflation numbers will likely impact sentiment toward the ECB rate path more.

Economists forecast the annual inflation rate to increase from 2.4% to 2.5% and core inflation to advance from 2.7% to 2.8% in April.

EUR/USD Reaction to German Retail Sales

Before the German retail sales report, the EUR/USD climbed to a high of $1.08344 before falling to a low of $1.08112.

However, in response to the retail sales figures, the EUR/USD rose to a high of $1.08218 before falling to a low of $1.08193.

On Friday (May 31), the EUR/USD was down 0.11% to $1.08195.

Up Next

Later in the Friday session, the US Personal Income and Outlays Report will warrant investor attention. Better-than-expected numbers may sink investor bets on a September Fed interest rate hike.

Economists forecast the US Core PCE Price Index to increase 2.8% year-on-year in April after advancing 2.8% in March.

Additionally, economists expect personal income to increase by 0.3% in April after a 0.5% rise in March. Finally, economists predict personal spending to rise by 0.3% after a 0.8% jump in March.

With the focus on the US Personal Income and Outlays Report, investors should also monitor FOMC member chatter. Reactions to the Report could impact buyer demand for the US dollar and market risk sentiment.