German Consumer Confidence Is Expected to Increase in November, Defying Inflation

By Maria Martinez

Consumer sentiment in Germany is expected to strengthen in November, due to increasing propensity to consume and declining propensity to save, according to data from market-research group GfK released on Wednesday.

GfK's forward-looking consumer sentiment index forecasts confidence among households rising to 0.9 point in November from a revised figure of 0.4 point in October. Economists polled by The Wall Street Journal anticipated a drop, expecting sentiment to decline to minus 0.3 point.

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 October, propensity to buy increased, while economic and income expectations decreased.

Propensity to buy increased to 19.4 in October from 13.4 in September, posting the highest value in ten month, GfK said.

German citizens are clearly expecting further price increases and that is why they want to make purchases, in order to avoid even higher prices, Rolf Buerkl, consumer expert at GfK, said.

"If the surge in prices continues, it would put a strain on consumer sentiment and a fundamental recovery would likely be further delayed," Mr. Buerkl said.

Economic expectations fell to 46.6 in October from 48.5 in September. Despite the decline, economic expectations remain at a high level.

"The good level indicates that consumers remain confident about the recovery of the German economy," GfK said.

Income expectations dropped to 23.3 in October from 37.4 in September, as this indicator currently appears to be suffering the most from mounting inflation costs, as higher prices reduce the purchasing powers of income, the market-research group said.

Write to Maria Martinez at [e-mail]

(END) Dow Jones Newswires

10-27-21 0214ET