The business climate index in Germany’s retail sector fell slightly in normally consumer spending-heavy December, as retailers assess their current situation as somewhat worse than in November, the Ifo Institute said on Friday.
Business expectations for the coming months also declined slightly, Ifo added.

This year was very challenging for the retail sector and the overall economic environment is likely to remain difficult in 2025, “even though many retailers are hoping for an improvement in consumer sentiment,” said Ifo expert Patrick Hoeppner.

Although the business climate in the consumer goods industry initially improved in the first half of 2024, things went downhill in the second half of the year, Ifo surveys showed.

“In addition to weakening demand, the shortage of skilled workers remained a pressing problem for many retailers in 2024,” said Hoeppner.

The outlook for 2025 is mixed. Rising disposable income could provide positive momentum, but economic policy uncertainty is continuing to weigh on both retailers and consumers, Ifo added.