German consumer sentiment is poised to decline further in February, undermining initial optimism for a gradual recovery as the year begins, according to data released jointly by the market research firm GfK and the Nuremberg Institute for Market Decisions.
The consumer climate index unexpectedly dropped to -22.4 for February, down from a revised -21.4 in January, contrary to expectations of an increase to -20.5. "The Consumer Climate faces another setback and enters the new year on a bleak note," stated Rolf Burkl, a consumer expert at NIM. "Any cautious optimism for recovery sparked by last month's increase has dissipated."
Burkl noted that a sustained recovery currently appears unlikely, particularly given the recent rise in inflation.
Consumers' expectations concerning the general economic outlook over the coming year decreased by 1.9 points to -1.6 in January. Similarly, household views on their financial situation over the next year became less optimistic, with the income expectations index falling by 2.5 points to -1.1, following a 4.9-point increase in December.
The decline in income prospects is a primary factor behind the reduced willingness to buy, with the associated index falling three points to -8.4, marking its lowest level since August 2024.
The resurgence in inflation during December likely suppressed not only income projections but also consumer expenditure. Additionally, reports of factory shutdowns and relocations are heightening concerns about job security.
Conversely, the willingness to save showed a moderate improvement in January, as the indicator climbed to 8.2 from 5.9 in December.
