With the awakening of spring, the mood to buy also increases in Germany. The lower energy prices and government support measures are the main reasons for the improved consumer climate.
The better economic and income prospects in Germany are boosting consumer sentiment. As reported by the Nuremberg-based consumer research company GfK, the consumer climate barometer in May reached its highest level since April 2022. With an increase of 3.6 points to minus 25.7 points compared to the previous month, this is the seventh increase in a row.
“After the growth in the previous month was rather small, consumer sentiment is rising again this month,” said GfK expert Rolf Bürkl. “However, the value still remains below the pre-pandemic level of about three years ago.”
income expectations climb
The main driver behind the development is that people are more positive about their future financial situation. These income expectations rose for the seventh time in a row, returning to the pre-Ukraine war level for the first time. This is mainly due to the more moderate energy prices.
In addition, there are various political programs that help to at least partially compensate for the high energy prices for households and companies. “Together with the expected increase in collectively agreed income, more and more households are assuming that the high loss of purchasing power originally feared due to inflation will be significantly less severe,” according to the GfK market researchers.
Stabilizes the economic sentiment?
Consumers are also more positive about the economic outlook. At 14.3 points, the corresponding indicator is well above its long-term average of zero points. Most recently, the leading economic research institutes had raised their economic forecast for Germany. They expect gross domestic product to grow by 0.3 percent this year, after predicting a fall of 0.4 percent in the fall.
Consumers have become more willing to make larger purchases. “Despite the growth, the level of propensity to consume is currently still lower than at the time of the two pandemic-related lockdowns in spring 2020 and at the end of 2020/beginning of 2021,” it said. “Many households are still unsettled, above all because the bills for the past heating season are now pending and significantly higher costs can be expected here.” The willingness to buy is mainly supported by the stable labor market.