German consumers in mixed mood

26 May 2011

NUREMBERG: Consumer sentiment in Germany remains mixed at present, but shoppers are still willing to make purchases despite the rising problem of inflation.

Research firm GfK surveyed 2,000 people in the country, and found its June barometer of economic expectations had contracted by 1.2 points on a monthly basis, reaching 46.1 points.

More positively, this total marked a meaningful improvement compared with the rating of 42 points registered a year earlier.

Elsewhere, the projections regarding future earnings hit 25,9 points, the second successive decline since April, when figures were nearly ten points higher.

Contributors behind such shifts included financial instability in several European nations, surging energy costs and unrest across the Middle and Africa, eclipsing the strengthening domestic situation.

Inflation constitutes another anxiety driver, given a third of the panel displayed concern about this matter, as was the case for only a quarter of the sample 12 months ago.

"Consumers very quickly have the impression that everything is becoming more expensive; their purchasing power is falling and as a result, the income growth enjoyed by employees this year is being largely offset," the study said.

Fear of unemployment retained its position as the number one cause of worry, on 55%, but perceptions here have improved as fiscal stability returns, yielding an 11% drop in negative scores.

Following on from these combined forces, the "propensity to buy" index slid by 2.7 points, although the overall reading of 31.5 points was broadly in line with the long-term average.

"The indicator is therefore continuing to perform well in spite of the risks that rising inflation represents for consumers," the study said.

"One major factor boosting the propensity to buy is undoubtedly the very pleasing development on the labor market."

"Consumers have greater planning security as a result, particularly as regards larger purchases; in addition these are mostly not affected by the current price hikes."

The overarching attitudinal monitor compiled by GfK stood at 5.5 points, down just 0.2 points measured against May.

Data sourced from GfK; additional content by Warc staff