Consumer sentiment in Germany has taken a substantial downturn, reaching its lowest level since March 2023. The Gfk Consumer Sentiment Indicator for February sharply declined from -25.4 to -29.7, faring worse than the anticipated -24.3. This significant drop signals a reversal of the temporary improvement observed last month, which now appears to have been a fleeting pre-Christmas optimism.
Economic expectations in January plummeted to their lowest since December 2022, dropping from -0.4 to -6.6. Income expectations suffered a marked decline from -6.9 to -20.0, the weakest since March 2023. Concurrently, willingness to buy among consumers decreased from -8.8 to -14.8. Willingness to save has shown an increase, rising from 7.3 to 14.0, the highest level since August 2008. This suggests a shift in consumer behavior towards saving rather than spending.
Rolf Bürkl, consumer expert at NIM, remarked that the brief improvement in consumer sentiment witnessed last month was merely a transient spike. The decline in income expectations and willingness to buy, coupled with a growing propensity to save, have contributed to a significant setback in the Consumer Climate at the start of the year.
