Retail sales in Germany declined by 1.1% month-over-month in April 2025, reversing the upwardly revised 0.9% gain recorded in March and coming in well below market expectations of a modest 0.2% increase. This marked the first monthly drop in retail activity since December 2024, raising concerns about the resilience of consumer spending in Europe’s largest economy as households remain cautious amid elevated living costs and lingering economic uncertainty.
German retail sales return to decline
The downturn in April was broad-based but most pronounced in the non-food segment, where sales fell by 1.3%. This category includes durable goods such as clothing, electronics, and household items—areas that tend to be more sensitive to consumer sentiment. The decline suggests that discretionary spending may be softening as consumers grow more price-conscious or delay non-essential purchases. Food sales also edged down by 0.1%, reflecting a plateau in demand following several months of stronger activity driven by earlier price stabilization and mild weather.
Online retail, which has been a significant growth area in recent years, also posted a slight contraction of 0.2% on the month, indicating a pause in momentum after a period of strong digital consumption. This may point to normalization in shopping behavior as more consumers return to physical stores, or possibly the impact of reduced promotional activity among e-commerce platforms in April.
Despite the monthly decline, the year-on-year figures painted a more positive picture. Retail sales rose 2.3% in April compared to the same period last year, though this was slower than the 3.3% annual growth seen in March. Still, the result beat market forecasts of a 1.8% rise, suggesting that the broader consumption trend remains intact, if somewhat uneven. Yearly gains were recorded in both the food sector (+2.3%) and non-food sector (+2.6%), with the latter supported by improvements in subcategories such as household appliances and personal care products. Notably, online sales soared 14.1% compared to April 2024, continuing a multi-year trend of strong e-commerce growth despite the recent monthly dip.
Strong domestic demand in Germany
The mixed data adds to the complexity facing policymakers and investors trying to gauge the strength of domestic demand in Germany. While inflation has been easing and labor market conditions remain relatively stable, headwinds such as high interest rates, global trade tensions, and geopolitical uncertainties continue to weigh on consumer confidence. Furthermore, Germany’s retail sector remains particularly sensitive to fluctuations in energy prices and external shocks, which could resurface in the coming months.
Looking ahead, the trajectory of retail activity will likely depend on how quickly consumer confidence can rebound and whether real wage growth—now starting to outpace inflation—translates into stronger household spending. Upcoming data on industrial production and sentiment indices will be closely watched for further signs of whether April’s retail decline is a temporary blip or an early indication of broader economic cooling.
