Fall In German Consumer Confidence Damps Recovery Hopes

(RTTNews) - German consumer sentiment is set to weaken in February, dampening hopes of a cautious recovery at the start of the year, survey data jointly published by the market research group GfK and the Nuremberg Institute for Market Decisions showed on Wednesday.

The consumer climate index fell unexpectedly to -22.4 in February from revised -21.4 in January. The indicator was expected to rise to -20.5. "The Consumer Climate has suffered another setback and starts gloomy into the new year," NIM consumer expert Rolf Burkl said. "The few hopes of a cautious recovery that emerged after the rise in the previous month were dashed."

Burkl said a sustained recovery in the consumer climate is currently not in sight, especially as the inflation has also risen again recently.

Consumers' assessment of general economic situation over the coming year dropped 1.9 points to -1.6 in January.

Households view about own financial situation over the next twelve months was also less positive in January. The income expectations index dropped 2.5 points to -1.1 in January. This follows an increase of 4.9 points in December.

The fall in income prospects was the key reason for the weaker willingness to buy. The corresponding index dropped three points to -8.4, the lowest value since August 2024.

Inflation has increased again in December, which likely had a dampening effect not only on income prospects but also on consumer spending. Moreover, news about factory closures and production relocations are causing increasing concern among people about own jobs.

Meanwhile, willingness to save improved moderately in January. The indicator rose to 8.2 from 5.9 in December.