This retail slowdown follows a 0.3% contraction in the German economy during the second quarter, raising doubts about a sustained recovery.

Germany's retail sales declined by 1.5% in July compared to the previous month, adding to economic concerns.

Meanwhile, import prices in Germany fell by 1.4% year-on-year in July, slightly more than expected, reflecting weaker demand for foreign goods.

Despite rising wages—up 1.9% in the second quarter—and low inflation, consumer sentiment remains fragile due to fears of job losses and inflation uncertainty.

Economists describe the retail sales decline as a setback, noting that consumer confidence stays subdued despite real wages increasing for nine consecutive quarters.

Consumer spending on food and online shopping has decreased, with food sales down 1.8% and online sales down 3.8%, indicating cautious consumer behavior.

The HDE industry association forecasts a 2% increase in retail sales for 2025, but only a 0.5% real growth, highlighting a sluggish retail environment.

Lower import prices may influence upcoming inflation data, with August's inflation rate expected to rise slightly to 2.0% from 1.8%.

Despite positive annual growth, the softer retail performance signals a potential slowdown or increased consumer caution in Germany.

Broader financial market trends, including EUR/USD stability and European stock indices, provide context for Germany's economic data.

Related articles also discuss trends in European car registrations and currency exchange rates, reflecting ongoing economic uncertainties.

In the second quarter of 2025, Germans' real wages increased by 1.9%, with nominal wages rising 4.1% and inflation at 2.1%, yet consumer confidence remains weak.