German consumer sentiment set to improve - GfK

German consumer sentiment is set to improve in January, thanks in part to the government’s energy relief packages, according to a survey released on Wednesday by market research group GfK.

GfK’s forward-looking consumer sentiment index for January printed at -37.8, up from a revised -40.1 in December, coming in above consensus expectations of -38.0.

The survey showed that the propensity to buy index ticked up by 2.3 points to -16.3. Meanwhile, the index for income expectations rose 10.9 points on the month to -43.4. The economic expectations gauge rose 7.6 points to -10.3.

Rolf Bürkl, GfK consumer expert, said: "The third increase in a row indicates that consumer sentiment is slowly working its way out of the depression. The light at the end of the tunnel is getting a little brighter.

"The measures taken by the federal government to mitigate skyrocketing energy costs are apparently having an effect. However, it is still too soon to give the all-clear. The recovery of the consumer sentiment, as we are currently experiencing, is still on shaky ground. For example, if the geopolitical situation were to worsen again, leading to significantly higher energy prices, the light at the end of the tunnel would very quickly become dimmer again or even go out altogether."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "The headline GfK index extended its tepid rebound from a low in October, consistent with stabilisation in other surveys towards the end of the year. We see at least two reasons for this. Firstly, the beginning of winter has been a good deal less grim than feared earlier in the year, due mainly to unusually warm weather at the start of Q4, and significant voluntary savings by both households and firms.

"Secondly, the German government has pledged significant support for households starting next year, via its €200bn energy support package. These funds will, in part, be used to put in place a cap for consumer energy prices, starting in January, which will run through 2023."