German consumer sentiment is set to extend its recovery heading into the new year as government relief measures meant to take the bite out of soaring energy prices seem to be having an effect, a GfK institute said today.
The institute said its consumer sentiment index rose to -37.8 heading into January from a slightly revised reading of -40.1 in December, and above forecasts from analysts polled by Reuters of -38.
"With the third rise in a row, the consumer climate is slowly working its way out of the trough. The light at the end of the tunnel is getting a little brighter," said GfK consumer expert Rolf Buerkl.
However, despite the slight improvement, consumer confidence is still at a low point. October had marked the lowest reading in over a decade at -42.8.
A negative reading suggests a year-on-year drop in private consumption.
Buerkl said the recovery was still on shaky ground and could be thrown off balance, for example, by a significant jump in energy prices should the geopolitical situation deteriorate.
"The light at the end of the tunnel would become darker again very quickly, or even go out altogether," he said.
All three sub-indices saw an increase in December.
The largest jump was seen in income expectations, rising to -43.4 from -54.3 the previous month.
This comes as energy prices rose more moderately in recent weeks and a one-off gas relief payment for households in December kicks in.
