German consumer sentiment is set to improve in January for the third straight month amid government measures to curb rising energy costs, survey results from the market research group GfK showed.
The forward-looking consumer sentiment index rose to -37.8 in January, from -40.1 in December. Economists had forecast a score of 38.0.
The consumer climate continues to improve cautiously, as more moderate energy prices than originally expected and the federal government's relief packages to curb energy costs are causing pessimism to recede.
"With the third increase in a row, the consumer climate is slowly working its way out of the low," said Rolf Bürkl, a GfK consumer expert.
"The light at the end of the tunnel is getting a little brighter."
The consumer climate remains low despite the slight improvement. Therefore, the lack of consumption will remain a burden on economic development in Germany in the coming years, the GfK said.
Meanwhile in December, income expectations gained for the third time in a row, as the respective index rose by 10.9 points to -43.4. This improvement relied on a moderation in energy prices.
Despite a permanently falling trend between autumn 2021 and autumn 2022, the propensity to buy seems to be stabilizing in December. The relevant index gained by 2.3 points and came in at -16.3 in January.
Still, reluctance to buy among households remained high on the backdrop of uncertainty caused by the pandemic, the Ukraine war, and inflation.
"The recovery in consumer confidence, as we are currently seeing it, is still on shaky ground," Burkl said.
Economic experts are currently assuming that gross domestic product will fall by around half a percent in 2023.
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