German Retail Sales Tumble in January as Lockdown Bites

BERLIN (Reuters) – German retail sales tumbled more than expected in January as the COVID-19 lockdown and the withdrawal of a temporary cut in sales tax hit consumer spending in Europe’s largest economy, data showed on Tuesday.

The Federal Statistics Office said retail sales fell 4.5% on the month in real terms after an upwardly revised decline of 9.1% in December. The January reading undershot a Reuters forecast for a decline of 0.3%.

“This decline can be explained by the ongoing coronavirus lockdown, which meant a closure of many retail stores since Dec. 16, 2020,” the statistics office said.

The end of a temporary sales tax cut may also have contributed as many consumers made big ticket purchases before the end of 2020 to save money.

Fashion retail sales plunged 76.6% year-on-year, while sales of groceries were up 4.3% year-on-year as supermarkets and convenience stores remained open.

Online retailers continued to benefit from shifting consumer habits with sales up 31.7%.

Chancellor Angela Merkel and state premiers closed most shops and services in mid-December after a partial lockdown for bars, restaurants and entertainment venues failed to push down infections.

Merkel and state premiers are due to meet again on Wednesday to discuss a gradual easing of lockdown measures that are currently in place until at least March 7.

(Reporting by Caroline Copley; Editing by Riham Alkousaa and Andrew Heavens)