German GfK Consumer Sentiment To Improve In June

(RTTNews) - Consumer confidence in Germany is set to improve further in June on rising economic and income expectations amid slowing inflation and rising wages, results of a survey showed Wednesday.

The consumer confidence index rose to -20.9 in June from a revised -24.0 in the previous month, the survey published jointly by GfK and the Nuremberg Institute for Market Decisions showed Wednesday.

Overall consumer climate improved for the fourth time in a row.

Rolf Burkl, consumer expert at NIM said falling inflation rates combined with significant wage and salary increases strengthen consumer purchasing power.

This stimulates income expectations and also reduces consumer uncertainty, which was responsible for the comparatively high willingness to save in previous months, said Burkl.

There was a significant decline in the propensity to save in May. The corresponding index declined sharply by about 10 points to 5.0, the lowest value since August 2023.

Economic expectations among households increased for the fourth straight month in May. The index climbed 9.1 points to 9.8 in May. At the same time, the income expectations index rose 1.8 points to 12.5 in May. The reading reached its highest since January 2022. The improvement was underpinned by rising wages and salaries amid falling inflation. The real income growth strengthened households' purchasing power.

Nonetheless, the propensity to buy failed to gain any benefit from the increasing economic and income expectations. The index rose only 0.3 points to hit -12.3 in May.

Higher prices for food and energy as well as the ongoing uncertainty forced households to set aside financial resources for future rather than spending, GfK said.

"There still seems to be uncertainty among German consumers," Burkl said.

"This can be attributed to the lack of clear future prospects in the country, which undermines planning certainty when making purchases. People will have to regain this certainty before they are willing to invest their growing purchasing power in larger purchases."