By Maria Martinez

Consumer sentiment in Germany is expected to strengthen in October, reaching its highest level for the last year and a half, according to data from market-research group GfK released on Tuesday.

GfK's forward-looking consumer sentiment index forecasts confidence among households rising to 0.3 point in October from minus 1.1 points in September. Economists polled by The Wall Street Journal anticipate a drop, expecting sentiment to decline to minus 1.9 points.

The number of new Covid-19 cases is declining slightly and consumers are more optimistic that another wave will be less pronounced than feared, Rolf Buerkl, consumer expert at GfK, said.

"Even if the consumer sentiment has almost reached its pre-crisis level, it is still too early for talk of a fundamental trend shift," Mr. Buerkl said.

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 September, the three indicators posted gains.

Economic expectations rose to 48.5 in September from 40.8 in August, signaling that consumers consider the German economy on course for recovery, although the momentum is somewhat more moderate than expected a few months ago.

Income expectations increased to 37.4 in September from 30.5 in August, suggesting that rising prices haven't affected households' outlook on their personal financial situation.

"Extremely stable employment figures ensure that unemployment fears and the associated worry about loss of earnings do not currently play a notable role," the report said.

The propensity to buy increased to 13.4 in September from 10.3 in August. In contrast to economic and income expectations, the propensity to consume is at a low level, GfK said.

"Despite well-filled wallets, the obligation to wear masks and maintain social-distancing rules dampen any enthusiasm to shop," GfK said. The propensity to consume will only be able to recover sustainably once these restrictions cease to exist, the market-research group said.

Write to Maria Martinez at maria.martinez@wsj.com

(END) Dow Jones Newswires

09-28-21 0214ET