The indecision of consumers reflects the perplexity of many economic researchers.
(Photo: dpa)
Dusseldorf Germany’s consumers approach autumn with mixed feelings. Your assessments of the economic development as well as your own income development have worsened somewhat compared to the previous month. In addition, their concern about inflation continues to grow.
Nevertheless, consumers are planning to increasingly purchase durable consumer goods again in the fourth quarter that has just begun. The bottom line is that the HDE consumption barometer for October only fell slightly to 98.01. This was the third decline in a row.
The consumption barometer is calculated monthly by the Handelsblatt Research Institute for the HDE trade association. It is based on a representative consumer survey and consists of several sub-indicators that are included in the index according to their importance.
The indecision of consumers reflects the perplexity of many economic researchers. Most economic research institutes recently noticeably lowered their quite optimistic expectations for the current year and postponed the post-corona boom they expected from this year to the next year.
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However, it seems more and more questionable whether there will be such a boom at all. Because meanwhile, virologists are already warning of the next corona wave that could hit Germany in autumn and winter. It is possible that Germany is in a prolonged yo-yo economy, the spikes of which are only gradually decreasing.
The DIW assumes that the strong increase in economic output in the third quarter “could be the calm before a stormy winter in which the German economy can barely move”. In the past summer quarter, the German economy is likely to have grown by around 1.5 percent and thus grew at a similar rate to that in the second quarter.
Three out of four German industrial companies report bottlenecks
The economy is additionally burdened by the skyrocketing energy prices as well as the massive material deficiencies with which large parts of the manufacturing industry are struggling. According to an Ifo survey, three out of four German industrial companies report bottlenecks and problems in the procurement of primary products and raw materials. On the other hand, the situation on construction has eased slightly.
The sharply rising prices are also causing great displeasure among consumers. According to an initial estimate by the Federal Statistical Office, inflation in Germany was 4.1 percent in September.
Such a level was last measured in 1993. It is true that part of this inflation is homemade, since at the beginning of the year the federal government raised the temporarily lowered value added tax again and at the same time introduced a new CO2 tax.
At the same time, the rising consumer prices also reflect the scarcity of many goods – and a strong demand combined with a shortage of supply drives many prices up. The biggest price jumps over the year were again in September for energy: It cost 14.3 percent more than a year earlier. Food prices rose by 4.9 percent, services by 2.5 percent, including apartment rents by 1.4 percent.
The sharp rise in oil and gas prices also suggest that inflation will rise further. After all, with a slight delay, high energy prices drive up the manufacturing and transport costs of many goods. If they continue to grow strongly, “there could soon be a five in front of the decimal point in inflation”, expects Commerzbank chief economist Jörg Krämer.
The German retail trade is also experiencing a rollercoaster of emotions. In August, retailers achieved real calendar and seasonally adjusted sales of 1.1 percent more than in July 2021. Nonetheless, this did not make up for the sharp drop in sales from the previous month. Compared to the same month last year, sales in August were only 0.4 percent higher in real terms.
2021 could be another record year for retail
Nevertheless, the sales data for the first eight months of the year suggest that 2021 could be another record year for the retail sector. By the end of August, sales in the current year were 1.5 percent higher in real terms than in the same period of the previous year.
The big winner is the internet and mail order business, which was able to increase its sales by a good 20 percent. In contrast, stationary sales of textiles, clothing, shoes and leather goods fell by around a sixth.
More: Underestimated inflation: why prices keep rising.