The cheerful mood among German shoppers clouded unexpectedly heading into October, a new survey shows.
This suggests that a consumer-led upswing in Europe's biggest economy could lose some steam in the coming months.
Household spending has overtaken exports as the main source of economic expansion in Germany as consumers benefit from record-high employment, increased job security, rising real wages and low borrowing costs.
The GfK institute said its consumer sentiment indicator, which is based on a survey of around 2,000 Germans, edged down to 10.8 points going into October from 10.9 in the previous month.
This had been the highest reading in nearly 16 years and it also compared with a Reuters consensus forecast of the 11.
GfK researcher Rolf Buerkl said the main reason for the softening of consumer sentiment was a less upbeat assessment on income expectations. "The slowly rising inflation probably plays a role here," Buerkl said.
GfK's sub-index measuring income expectations fell to 52.7 points from 61.4 in the previous month.
Consumers' willingness to buy decreased 1.1 points to 57, indicating that German consumers are still in a good buying mood.
Buerkl cautioned, however, that consumer sentiment could deteriorate further in coming months due to possibly complicated coalition talks following Sunday's federal election.
"There is a risk that a political impasse could dent consumer sentiment in the coming months," Buerkl said.
Chancellor Angela Merkel has begun the tough task of trying to build a government after securing a fourth term in a federal election on Sunday.
Germany's leading economic institutes have raised their joint forecast for Europe's biggest economy to grow by 1.9% this year and 2% in 2018, both unadjusted for calendar effects, informed sources said this week.
The GfK survey was conducted between September 1-15 - before the federal elections.
