Higher inflation, US uncertainty weigh on German consumer confidence, GfK says

Increased uncertainty about the new US administration and higher inflation darkened German consumers' mood in February, a widely-followed barometre revealed.

As a result, GfK's consumer climate index was expected to soften from 10.2 in February to 10.0 in March, the survey compiler said.

Both economic and income expectations were seen softening, which would drag on consumers' propensity to buy.

"Apparently, the policies of the new U.S. president are causing uncertainty and economic worry among German consumers. Donald Trump’s plans to bolster protectionism are giving rise to job insecurity primarily among workers in industries that rely heavily on exports, such as the automotive and machine engineering branches, as well as the chemical industry," GfK said in a statement.

A gauge of economic expectations decreased 11.9 points to 9.7, nearly wiping out the improvement seen over the previous four months.

Nonetheless, in comparison to a year ago GfK said the climate was still "good" with the above index six points above the year-earlier levels.

The sub-index linked to income expectations retreated by 10.2 points to 48.1 - which was beneath its level in the same month of 2016.

That came as rising inflation kept real income growth for January at 1.9%.

Another gauge linked to Germans' 'propensity to buy' fell by a "relatively modest" six points to 51.6, thanks to the stable jobs market.

"Developments in the upcoming months will show whether the downward trend in propensity to buy persists."

GfK reiterated a 9 February forecast for consumer spending to grow by 1.5% in 2017.