Consumer sentiment in Germany has dropped significantly in January 2025, to its lowest value since February of last year, according to the latest Consumption Barometer from the German Retail Federation (HDE).
The data indicates that the slight recovery in consumer sentiment from the previous year has been almost completely reversed.
The reluctance to spend has returned, reflecting a growing uncertainty among consumers.
The data also showed that the propensity to buy has decreased on a month-on-month basis, indicating a shift from consumption to saving in the coming months.
Consumers are planning to save more and build up a financial cushion, the HDE noted.
Economic Expectations
Economic expectations among German consumers have also deteriorated, compared to the previous month.
However, consumers are more optimistic about the future of the economy as a whole than they were a year ago, the data showed.
Consumers expect an economic recovery to take time, due to the upcoming federal election.
The change of power in the USA is also contributing to uncertainty among consumers.
In terms of income expectations, consumers are more pessimistic, compared to the previous month.
Moreover, consumers do not expect their disposable income to increase noticeably in the coming weeks, mainly due to the ongoing tense situation in the labour market.
Consumption Barometer
The HDE Consumption Barometer, published on the first Monday of each month, is based on a monthly survey of 1,600 people on their propensity to buy, their propensity to save, their financial situation, and other consumption-related factors.
Produced by the Handelsblatt Research Institute (HRI) on behalf of the HDE, the barometer serves as an indicator for private consumption.
It does not reflect current consumer behaviour, but, rather, the expected mood of the next three months.
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