Retail Sales in Germany Rise in January, the First Rise in Three Months

Total retail sales in Germany rose 2.32% in January from December, the first rise in three months. Sales of staples such as food, beverages and tobacco that have generally been in a rising trend, rose 3.62%. In addition, there were significant increases in sales of some of the more discretionary types of spending. Sales of clothing, footwear and leather rose 3.16% and sales of furniture and related items rose 3.77%. Sales of motor vehicles, however, probably declined in January. While actual data on sales of motor vehicles are not available, the fact that total sales were up 2.32% and sales excluding autos were up 2.36%, suggests that auto sales were lower in January.

The increase in spending in January suggests that the reduction in consumer income taxes of some 15 billion euros that became effective on January 1, 2004 may have outweighed the dampening effect of increased medical costs that also became effective on January 1, 2004. As part of a number of reform measures taken over the past year to increase German competitiveness, consumers have to bear a larger cost of doctor visits, hospital stays and medical equipment, such as wheel chairs.