Retail share of private consumption 2023
Share of retail spending slightly declines again
retail share of private consumption in the EU-27
The share of retail in private consumption in the 27 EU countries continued to fall in 2023 and is now 33.9 percent in Europe. Following the end of the COVID-19 pandemic, people are once again spending more money on travel, services and energy. This suggests a further normalization of the European population’s spending habits. During the pandemic, the retail share increased as spending on restaurants, cultural activities, events and travel largely disappeared. In fact, real retail turnover in the 27 EU countries only increased by 2 percent from 2019 to 2020, mainly driven by food retail, as other spending, for instance on clothing, was held back.
Compared to the other EU countries, the countries in Eastern Europe have the highest retail share of private consumption. In Hungary, the retail share is as high as 50 percent. In Bulgaria (49 percent) and Croatia (47 percent), also almost every second euro is spent on retail. Despite the growth in purchasing power, retail continues to play a dominant role in private consumption in Eastern Europe. In Western European countries, on the other hand, the share is lower as purchasing power levels are higher. Accordingly, households there spend a smaller proportion of their income on basic necessities such as food, clothing and other essential goods.
In contrast, consumer behavior in Germany is completely different. In Germany, only one in four euros (27 percent) is spent on retail. The reasons for this are a greater diversification of consumption, a higher average income and higher living costs, particularly for rent and ancillary expenses. In addition, more money is spent on services, leisure activities and other non-tangible goods that do not fall within the retail sector. Moreover, households in countries with higher income levels invest a larger proportion of their income in savings and financial investments. In Germany, 11 percent of purchasing power is spent on food. At 2.7 percent, DIY expenditures are already in second place. In Romania, where purchasing power is low, households have to spend more than 18 percent of their income on food. At 5.3 percent, health and care are in second place in terms of expenditure.
With the slow decline in the inflation rate, the burden on consumers is also expected to normalize. While the share of retail spending has risen in many European countries in recent years due to COVID-19 and the war, it is gradually falling again. At 13.4 percent, consumers in Germany spent the least on the food and healthcare products among all 27 EU countries. In 2020, the share for these product lines was still 12.2 percent, rising to 14.3 percent during the pandemic and the strong focus on FMCG. As inflation and COVID-19 restrictions eased, consumers spent less on FMCG again, which is why the share fell in 2023.