The German economy is likely to recover at a slower pace than predicted earlier, thanks to curbs to slow a second wave of coronavirus infections, thinktank Ifo institute said on Wednesday.

In its winter forecast, the institute lowered its growth forecast for Germany for next year to 4.2 per cent from five per cent predicted in its autumn forecast. Europe’s largest economy is expected to contract by 5.1 per cent this year, which is slightly lower than the 5.2 per cent contraction predicted earlier.

On the other hand, Ifo raised the growth outlook for Germany for 2022 to 2.5 per cent from 1.8 per cent. “Production of goods and services won’t reach pre-crisis levels until the end of 2021,” Ifo said.

Meanwhile, in the UK, inflation slowed more than expected in November due to falling clothing prices, data published by the Office for National Statistics (ONS) showed on Wednesday.

The ONS said the consumer price index fell to 0.3 per cent in November from 0.7 per cent a month earlier. Economists had forecast an inflation rate of 0.6 per cent.

Retailers are under renewed pressure as the rapid growth in COVID-19 infections discourages consumers from going to the shops, and amid fresh restrictions imposed in England, alongside tough measures in Scotland, Northern Ireland and Wales.

Falling food and drink prices also dragged down the inflation rate by the most since 2017, driven by goods such as vegetables and confectionery.

In the US, the Commerce Department released a report on Wednesday showing that retail sales fell sharply in November, reflecting renewed lockdowns in some states as a result of the recent spike in new coronavirus cases.

Sales fell by 1.1 per cent in the review month – more than economists had predicted – as spending on categories like cars, electronic goods, clothing and restaurants and bars softened, according to the report.

The Commerce Department also revised its retail sales figures for October to a 0.1 per cent decline, from an increase of 0.3 per cent that had been previously reported. Economists said the declines are “warning signs” that the economy was entering a rough patch and in need of a jolt from another round of government stimulus.

This report was compiled by Bank of Valletta plc for general information purposes only.