German consumer sentiment unlikely to recover this year -GfK

BY Reuters | ECONOMIC | 09/27/23 02:00 AM EDT
          BERLIN, Sept 27 (Reuters) - Sentiment among German
consumers is set to fall in October, as persistently high
inflation encourages people to save and blots out the chances of
a recovery before the end of the year, a GfK institute survey
found on Wednesday.
    The institute's consumer sentiment index fell to -26.5
heading into October from a slightly revised -25.6 in September,
below expectations of analysts polled by Reuters of -26.0.
    The slight decrease for a second month in a row was due
primarily to a jump in consumers' propensity to save, which hit
8.0 points in September - its highest since April 2011 - after a
reading of only 0.5 a month earlier, according to GfK.
    "This means that the chances of a recovery in consumer
sentiment are likely to have fallen to zero before the end of
the year," said Rolf Buerkl, GfK's consumer expert.
    "Thus, private consumption will not make a positive
contribution to overall economic development this year."
    Domestic demand will improve only when the inflation rate is
brought back to a tolerable level, said GfK, adding that it was
not yet possible to predict when that goal will be reached.

                                OCT 2023  SEP 2023  OCT 2022
 Consumer climate               -26.5     -25.6     -42.8
 Consumer climate components    SEP 2023  AUG 2023  SEP 2022
 - willingness to buy           -16.4     -17.0     -19.5
 - income expectations          -11.3     -11.5     -67.7
 - business cycle expectations  -3.4      -6.2      -21.9

NOTE - The survey period was from August 31 to September 11,

    The consumer climate indicator forecasts the progress of
real private consumption in the following month.
    An indicator reading above zero signals year-on-year growth
in private consumption. A value below zero indicates a drop
compared with the same period a year earlier.
    According to GfK, a one-point change in the indicator
corresponds to a year-on-year change of 0.1% in private
    The "willingness to buy" indicator represents the balance
between positive and negative responses to the question: "Do you
think now is a good time to buy major items?"
    The income expectations sub-index reflects expectations
about the development of household finances in the coming 12
    The additional business cycle expectations index reflects
respondents' assessment of the general economic situation over
the next 12 months.

 (Reporting by Miranda Murray, Editing by Rachel More and
Bernadette Baum)

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