The Ifo Institute reported on Tuesday that the business climate in the retail sector remained nearly unchanged in August, recording -29.0 points compared to July. This stagnation halts the recovery trend that had been visible since May.
Companies assessed their current circumstances as weaker than they did in July. While business expectations showed a minor improvement, overall outlooks for the remainder of the year remain pessimistic. According to Ifo industry expert Patrick Höppner, “The mood among retailers remains very reserved. Many dealers have gained little from the economic recovery of the broader economy so far.”
Looking ahead, the Ifo Institute’s current economic forecast shows that overall economic output is projected to grow by 1.4% in 2026. In contrast, private consumer spending is expected to rise by only 0.4% in real terms. Höppner noted that rising energy prices are a significant factor, predicting they will drive inflation higher in 2026. This pressure limits consumer purchasing power and dampens sentiment, ensuring that the business environment for retail remains highly challenging. Despite recent gains in the business climate, the key indicator remains low when measured against the last three years.
Regarding pricing, many businesses planned to raise their prices less frequently in the coming months in August compared to July, with the majority anticipating roughly stable pricing. In line with the Federal Statistical Office’s consumer price statistics, many retail product categories have seen less significant price inflation throughout the year than the overall consumer prices. Specifically, prices for foods and non-alcoholic beverages were 0.1% higher in August 2026 than in August 2025, while clothing and shoes increased by 0.4%. Overall consumer prices rose by 2.9%.
