Consumer sentiment in Germany has made a ‘bumpy start’ to 2025, according to the latest GfK Consumer Climate report, produced by GfK and the Nuremberg Institute for Market Decisions (NIM).
Both economic and income expectations, along with the willingness to buy, saw declines in January 2025, however there was a slight increase observed in the willingness to save.
As a result of the decline in January, the GfK Consumer Climate forecast for February has dropped slightly, from -21.4 points in January to a predicted -22.4 points this month.
The ‘willingness to save’ index has risen by 2.3 points compared to the same month last year, however, and currently stands at 8.2 points.
A gloomy start
“The consumer climate has suffered another setback and starts gloomy into the new year,” commented Rolf Bürkl, consumer expert at NIM. “The few hopes of a cautious recovery that emerged after the rise in the previous month were dashed. Since the middle of last year, we have seen a stagnating trend at best, while in the first half of 2024 the signs were still pointing to recovery.
“A sustainable recovery in the consumer climate is currently not in sight, especially as the inflation rate has also risen again recently.”
‘Flash in the pan’
At the end of last year, there was a modest improvement in how Germans saw the economic environment over the coming 12 months, however this was just a ‘flash in the pan’, according to the report.
The economic indicator fell by 1.9 points in January 2025, now standing at -1.6 points.
According to Federal Statistical Office data, Germany’s economy contracted by 0.2% in 2024, marking the second consecutive year of recession. Economic growth forecasts for 2025 have been revised downward to just 0.5% growth in real GDP.
Income expectations among consumers have also shown a decline, with the indicator losing 2.5 points, now standing at -1.1 points for February, which is a partial reversal of the 4.9-point gain in December 2024.
The ‘willingness to buy’ indicator, meanwhile, has dropped by 3 points to -8.4 points, the lowest value since August 2024.
Inflation rate
‘The inflation rate in Germany has recently increased again. According to initial preliminary calculations by the Federal Statistical Office, prices rose by 2.6% in December compared to the previous year,’ GfK and NIM said.
‘This is likely to have had a dampening effect not only on income prospects but also on consumer spending. In addition, the ongoing news of factory closures and production relocations is causing increasing concern among the population about their own jobs. This is also affecting the consumer sentiment.’ Read more here.
