German Consumer Confidence Improves as Inflation Slows

girl shopping in a supermarket

Cautious Optimism: German Consumers' Confidence Improves Amid Income Hopes Image: Pexels/ Gustavo Fring

Good news for the German economy. According to a recent survey by the GfK Institute, the way people feel about their financial situation and the economy is getting better. They refer to this as ‘consumer sentiment,’ and it’s expected to stabilise in August after a small drop last month.

The survey showed that people are feeling more hopeful about their income. They believe that inflation of the rising cost of goods and services will go down soon. This positive outlook on income helped the consumer sentiment index to rise to -24.4 in August, up from -25.2 in July.

The index measures how optimistic or pessimistic people are about spending money. When the index is above zero, it means people are likely to spend more and help the economy grow. But when it’s below zero, it means people might spend less and slow down economic growth.

Though there’s been improvement, experts say that consumer sentiment will still be quite low in the next few months. This means people might not spend as much, and it won’t help the economy bounce back strongly. One of the reasons for the recent worries was the high inflation in June, but experts predict it will go back down soon. If that happens, consumer confidence could continue to improve.

The hope of lower inflation rates has helped ease some of the worries. Overall, it’s good to see that German consumers are feeling a bit more positive about their money and the economy. However, it might take some time before we see a big boost in spending and economic growth. As things change, experts will keep a close eye on how people’s feelings about the economy evolve.

Although The European Central Bank raised interest rates for the ninth straight time Thursday, July 27 in its yearlong campaign to stamp out painfully high inflation and kept the door open to further hikes despite increasing fears of recession. We will see how this affects consumer confidence over the coming months.

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Written by

Catherine McGeer

I am an Irish writer who has been living in Spain for the past twenty years. My writing centers around the Costa Cálida. As a mother I also write about family life on the coast of Spain and every now and then I try to break down the world of Spanish politics!