Germany’s consumer climate remains under pressure, with the January GfK Consumer Confidence Index showing only a modest improvement, reflecting continued pessimism amid high inflation and job insecurity.
The index rose by 1.8 points to -21.3, up from December’s -23.1, but it still falls far below pre-pandemic levels, signaling a fragile consumer sentiment as the country heads into 2025.
While the rise exceeded market expectations of -22.5, it remains a sign of deep caution among consumers. Gains in income expectations and a slight improvement in the willingness to buy were behind the uptick. Income expectations increased by 4.9 points to 1.4, recovering from a sharp 17-point drop in November, while the willingness to buy rose by 0.6 points to -5.4, though it remains low. On the other hand, the willingness to save fell sharply, dropping by six points to 5.9, reflecting reduced caution in consumer spending.
However, consumer sentiment remains fragile. “The consumer climate remains at a very low level,” cautioned Rolf Bürkl, a consumer expert at the Nürnberg Institute for Market Decisions. “A sustained recovery in consumer sentiment is not yet in sight, as consumer uncertainty is still too high. The main reason is high food and energy prices. In addition, concerns about job security are growing in many sectors.”
Economic expectations for January remained stagnant, with the indicator reading 0.3, slightly higher than December’s -3.6. Economic research institutions, including the ifo Institute, have forecast near-stagnant growth for 2025, following a slight contraction expected in 2024.
Meanwhile, the DAX index fell 0.9% to around 20,000 points, marking its fifth consecutive loss, as European markets slid on signals of a hawkish Federal Reserve. Infineon AG led the decline with a 3.5% drop, followed by Vonovia AG (-2.4%) and Continental AG (-2%). However, MTU Aero Engines AG and Rheinmetall AG outperformed, each gaining 0.8%.
