UEFA European Football Championship Unlikely To Give Major Boost To German Retail - Ifo

(RTTNews) - Only supermarkets, beverage retailers and specialized sports goods stores in Germany are likely to register any significant growth in sales as the country hosts the UEFA Euro 2024 football tournament that kicks off in the middle of the month, the ifo institute said Monday. The ifo business confidence indicator for the retail industry rose to -13.3 points in May from -14.5 points in April, mirroring slightly better business expectations.

However, the think tank said the outlook for retailers remains pessimistic with the indicator for assessments of the current business situation remaining unchanged at -2.1 points. "The European Football Championship is unlikely to deliver any noticeable sales impetus for retail as a whole," ifo expert Patrick Hoppner said.

"Only supermarkets and beverage retailers, as well as specialist sports stores, might feel a positive impact from this major sporting event," Hoppner said.

Prices are likely to rise in many lines of retail business in the short term, mainly in food retail and in shops selling electrical goods and electronic household appliances. "Prices for bicycles and consumer electronics products, on the other hand, might well fall in the near future," Hoppner said.

Official data released on Friday showed that retail sales in Germany declined more than expected in April, largely led by a slump in sales of food.

Meanwhile, the price expectations survey by ifo showed last week that more companies in manufacturing and wholesale plan to raise their prices than in the previous month, while such expectations sunk in the consumer-related industries.

The institute expects inflation to fall in coming months and reach below 2.0 percent for the first time since March 2021, in August.

The GfK survey showed that the propensity to buy among German consumers failed to gain any benefit from the increasing economic and income expectations in May.

Higher prices for food and energy as well as the ongoing uncertainty forced households to set aside financial resources for future rather than spending, GfK said.

Germany's harmonized inflation climbed to 2.8 percent in May from 2.4 percent in April, underpinned by an acceleration in services inflation.

The stickiness of inflation is likely to cause concern for the European Central Bank that is preparing to reduce interest rates on Thursday, but recent data suggest there is limited scope for any easing beyond that this year.