Germany’s Consumer Sentiment Improves at Start of the Year

Consumer spending is expected to remain modest at the start of the new year. Their propensity to save rose in December to its highest level since the financial and economic crisis of 2008. - AFP

Consumer sentiment in Germany improved at the beginning of the year. Both economic expectations, income expectations and the willingness to make major purchases rose in January, according to figures released Wednesday by the market research company GfK and the Nuremberg Institute for Market Decisions (NIM). As a result, the consumer climate index for February increased by 2.8 points to minus 24.1 points. The level nevertheless remains low, NIM consumer expert Rolf Bürkl said.

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Consumers view the economic outlook for the next twelve months more positively than in December, GfK and NIM reported. Economic experts currently expect around 1 percent economic growth in 2026. Income expectations have also improved. “The increase in the minimum wage as of January 1, 2026, as well as reduced consumer fears of inflation, are apparently boosting expectations of better incomes,” Bürkl explained.

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Willingness to purchase also increased. The corresponding index reached its highest level since March 2022. This indicator measures whether consumers currently consider it advisable to make major purchases. Consumers must also have the financial means for such purchases and perceive a need for them, GfK and NIM explained. The index relates exclusively to durable consumer goods that require a larger budget.

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Bürkl described the trend as “positive.” However, he cautioned that it remains to be seen whether it “can consolidate in the coming months.” Ongoing geopolitical tensions and any escalation of trade conflicts could quickly undermine sentiment. “The current improvement therefore stands on fragile ground.”

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The consumer climate is considered an important indicator of consumer spending, which in turn is a key pillar of economic development in Germany. GfK and NIM conduct monthly interviews with consumers. For the current survey, around 2,000 people were interviewed between January 2 and 13. The consumer climate refers to overall private consumption expenditure, including retail, services, travel, rent and healthcare services.

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