Rising wages arouse optimism among consumers, but high prices and economic uncertainty prevent larger purchases. Discussions about the heating law are a burden.
The consumer climate in Germany has brightened for the eighth month in a row due to noticeable wage increases. The GfK consumer researchers are forecasting their barometer to rise by 1.6 points to minus 24.2 points in June. This is the highest level since April 2022. Nevertheless, consumer sentiment is only sluggishly recovering.
“Consumer sentiment is still below the low level of spring 2020 during the first corona lockdown,” said GfK expert Rolf Bürkl today about the survey of 2,000 consumers. This indicates that private consumption will not make any significant contribution to overall economic development in Germany this year.
Lower propensity to save
The slight recovery was therefore supported in particular by income expectations, which also increased for the eighth time in a row. “Above all, the expectations of significantly higher, collectively agreed income increases are responsible for the more optimistic mood,” it said.
Many employees assumed that the rise in wages and salaries would at least partially compensate for the price increases. The loss of purchasing power would thus be lower than initially feared. A lower propensity to save also caused the consumption barometer to rise and prevented a standstill in the recovery of the consumer climate.
Concerns about the new heating law
However, the willingness to make larger purchases did not benefit from this. This indicator went down. “German consumers are unsettled by high living costs,” is how the GfK experts explained this development. “So they remain extremely cautious about their purchases.”
In addition, the discussions about the government’s new heating law are causing concerns, especially for property owners. If the heating system needs to be changed, additional costs would arise due to energy-related renovation measures such as thermal insulation. “This should put an additional strain on the propensity to consume,” it said.
Consumers are also more pessimistic than recently about the prospects for the German economy. “Apparently, consumers are unsure how the German economy will develop in the coming months,” the market researchers said.