By Maria Martinez
(Reuters) – German retail sales fell and import prices rose in March, according to data published on Wednesday, pointing to higher inflation ahead and persistently weak consumption.
German retail sales decreased 0.2% compared with the previous month, the federal statistics office said. Analysts polled by Reuters had predicted a 0.4% decrease.
Although the unemployment rate remains relatively low and real wages are developing positively, retail sales have fallen from a low level, said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank AG.
“After two years of recession and in view of the flood of unsettling news that hits people on a daily basis, it is obviously not so easy to look to the future with more confidence and to be a little more generous with consumer wishes,” de la Rubia said.
To avoid a third year of contraction in 2025, economists agree that boosting consumption in Europe’s biggest economy is crucial.
U.S. President Donald Trump’s tariff offensive is threatening two-way trade between Germany and the United States and risking major damage to an already limping German economy.
Mercedes-Benz on Wednesday pulled its earnings guidance for 2025 amid uncertainty over the impact of U.S. tariffs on car imports and Volkswagen said it expects profit margins this year to be at the bottom end of its forecast.
German import prices increased by 2.1% year-on-year in March, the statistics office said. Analysts polled by Reuters had predicted a 2.6% increase.
This shows a slowdown from the 3.6% increase in February and 3.1% rise in January.
Since the German economy purchases many primary products and raw materials from abroad, higher import prices are reflected in inflation data with a time lag.
Germany will publish national inflation data for April later on Wednesday, with the rate expected to slow to 2.1% from 2.3% the previous month.
The German data comes ahead of the euro zone inflation release on Friday. Inflation in the bloc is expected at 2.1% in April, down from 2.2% in the previous month, according to economists polled by Reuters.
(Reporting by Marleen Kaesebier and Cian Muenster in Gdansk, Maria Martinez in Berlin, Editing by Rachel More, Kirsti Knolle and Sharon Singleton)
