German Consumer Confidence Is Expected to Fall in December

By Maria Martinez

Consumer sentiment in Germany is expected to deteriorate noticeably in December, due to rising inflation and a surge in coronavirus cases, according to data released by market-research group GfK on Thursday.

GfK's forward-looking consumer sentiment index forecasts confidence among households falling to minus 1.6 points in December from a revised figure of 1.0 point in November. Economists polled by The Wall Street Journal anticipated a drop, expecting sentiment to decline to minus 1.0 points.

Consumer sentiment is currently being squeezed from two sides, Rolf Buerkl, consumer expert at GfK said. The number of cases in the fourth wave of the coronavirus pandemic is soaring, which threatens to overwhelm the health system and could lead to further restrictions, while the purchasing power of consumers is dwindling due to a high inflation rate, he added.

GfK uses data from three subindexes from the current month to derive a sentiment figure for the coming month, measuring consumers' economic expectations, income expectations and propensity to buy. In November, the three indicators decreased.

Economic expectations fell to 31 points in November from 46.6 in October. The recovery of the German economy is starting to falter, primarily due to interruptions in supply chains, GfK said.

The income expectation indicator fell again in November, to 12.9, from 23.3 in the previous month.

"On the one hand, the indicator is influenced by high inflation and an associated reduction in the purchasing power of income, while on the other hand, it is influenced by production restrictions caused by interruptions in supply chains," the market-research group said.

Propensity to buy fell to a nine-month low of 9.7 from 19.4 in October.

Write to Maria Martinez at [e-mail]

(END) Dow Jones Newswires

11-25-21 0214ET