Consumer confidence in Germany has risen for the third consecutive month, according to a market research survey released on Thursday. The survey, published jointly by the GfK market research company and the Nuremberg Institute for Market Decisions (NIM), showed that consumer confidence rose by 3.1 points to -24.2 heading into May. This increase was higher than expected and marks a two-year high for GfK’s consumer confidence barometer.
The improvement in consumer confidence is driven by a combination of factors, including rising wages and a recent decline in the inflation rate. According to Rolf Bürkl, a NIM consumer expert, these factors have increased purchasing power among German households, leading to increased spending on big-ticket items such as cars and furniture.
However, despite the recent gains, consumer spending in Germany remains below pre-pandemic levels. Bürkl noted that Germans’ propensity to buy is still substantially lower than before the start of the COVID-19 pandemic, which saw a sharp drop in consumption due to lockdowns in 2020 and 2021.
The improving consumer confidence comes amid a number of positive indicators for Europe’s largest economy. On Wednesday, the German government raised its economic growth forecast for 2023, citing rising private consumption as the reason for the increase. The inflation outlook for 2024 was also lowered from 2.8% to 2.4%.
Analysts believe that the fall in inflation will lead to increased consumer demand as people have more money in their wallets to spend. This positive outlook is expected to support Germany’s economic recovery in the coming months.
