German consumer confidence edges higher

German consumer confidence is continuing to edge higher, a closely-watched survey showed on Tuesday, as energy costs ease.

The latest GfK consumer sentiment index was forecast to rise to -33.9 for February, from January's revised -37.6. It is the fourth month in a row that the index has strengthened, although February’s reading is marginally below consensus for -33.0.

GfK said sentiment had been boosted by improved energy prices, which have benefited from a mild winter and government support measures.

Rolf Burkl, consumer expert at GfK, said: "The positive trend is consolidating. Even though the level is still very low, pessimism has eased recently. Falling energy prices, such as for gasoline and heating oil, have ensured that consumer sentiment is less gloomy.

"Nevertheless, 2023 will remain difficult for the domestic economy: private consumption will not be able to positively contribute to overall economic development this year."

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: "Overall, these data don’t change our view that consumer spending in Germany is now slowing, as the long period of very high inflation eats into real incomes.

"The recent shift to the upside in consumer sentiment looks real, however, pointing to upside risks to spending growth, from a depressed level, and increases the change of a more sustained recovery as of the second quarter."

The survey period was 5 to 16 January 2023.