Consumer sentiment in Germany remains on the upswing at the beginning of the new year. The index is up for the third month in a row, according to the latest consumer barometer of the German Retail Association (HDE). In particular, the recently more optimistic economic outlook appears to be contributing to the brighter outlook. However, consumer sentiment continues to improve only in small steps and is still at a low level in a multi-year comparison.
While consumer propensity to buy has usually declined after Christmas in recent years, there is virtually no change to be observed in January 2023. Compared with the previous month, the propensity to buy rises slightly but remains at a low level. The propensity to save remains unchanged.
The view of the overall economic situation is characterized by optimism. For the third month in succession, consumers’ economic expectations improved at a low level. This positive development is attributable to the recent significantly more optimistic economic forecasts. Consumers are less confident about their income expectations, which are down compared to the previous month. They therefore assume that an improvement in the overall economic situation will not initially be reflected in their income. The main factor contributing to the pessimistic assessment of disposable income in the coming months is high energy costs, which consumers are increasingly experiencing.
Overall, the upward trend in consumer sentiment is continuing, albeit at a slower pace. The trend in propensity to buy and government relief measures could provide at least some support for private consumption in Germany in the coming months.
