German Consumer Confidence Is Expected to Fall in January Due to Inflation and Omicron Fears

By Maria Martinez

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

GfK's forward-looking consumer sentiment index forecasts confidence among households falling to minus 6.8 in January from a revised figure of minus 1.8 points in December. Economists polled by The Wall Street Journal anticipated a drop to minus 2.5 points.

"High case numbers due to the fourth wave of the coronavirus pandemic with further restrictions, as well as significantly increased prices, are putting more and more pressure on consumer sentiment," Rolf Buerkl, consumer expert at GfK, said.

The 2G rule, requiring customers to be either fully vaccinated or have recovered, deals a heavy blow to the retail sector during the holiday season, 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 December, the three indicators decreased.

Economic expectations fell to 17.1 points in December from 31 points in November.

"The outlook for the beginning of next year is also muted against the backdrop of the rapid spread of the Omicron variant," Mr. Buerkl said.

The income expectation indicator fell again in December to 6.9 from 12.9 in the previous month. Rising prices for energy and food are weakening the purchasing power of consumers' incomes, the market-research group said.

Propensity to buy fell to 0.8 in December from 9.7 in November.

Write to Maria Martinez at [e-mail]

(END) Dow Jones Newswires

12-21-21 0214ET