German retail sales fell 2% in September from August, against a forecast for a 0.4% gain, a sign that shoppers are weakening just as prices accelerate.

The rest of the German data is mixed but leans the same way. The October composite PMI, a survey of business activity, fell to 52.8 from 53.8 against a forecast of 53.4, and August factory orders dropped 10.6% against an expected 1.0% fall. Against that, the Ifo business climate rose to 90.2 against 89.9 expected, and August industrial production rose 2%. The Economy Ministry said on October 14 that momentum likely slowed temporarily in the third quarter and that the industrial outlook stays subdued, less than a week after it raised its 2026 growth forecast to 1.3% from 0.5%. The retail figure backs the later, more cautious message over the upgrade.

Prices are moving the other way. German harmonized inflation reached 3.3% in September from 2.9% in August, and the wholesale price index rose 8.7% on the year, up from 6.8%. Import prices rose 10.4% on the year, up from 8.3%.

Bundesbank President Nagel said upside risks to inflation dominate, days after eurozone inflation hit 3.8% in September. InvestingLive reported that money markets price roughly 100 basis points of ECB rate increases by the end of 2027. Weak shoppers therefore give the central bank no cover to ease; the argument is over how much tightening slowing demand will allow, and Bund yields have to price that tension.

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