Consumer vote - Straw fire or long-term effect? Consumption climate rises
The mood of German consumers has significantly improved according to the latest Consumption Climate study in July. Consumer expectations regarding income are clear, the conjunctural expectation and the inclination towards larger purchases have at least moderately increased, as shown in the study by the Nuremberg Institute GfK and NIM.
Index rises
The Consumption-Climate Index has climbed by more than three points, to -18.4 points, compared to the previous month. However, this is still a very poor value in the long-term comparison. Before the Corona pandemic, the Consumption Climate was relatively stable at around +10 points.
"The improvement in the Consumption Climate in July is primarily due to the increased income expectation of Germans. However, it is likely that the EURO football championship in Germany, which has ignited euphoria in many parts of the population, is also playing a role," said Rolf Bürkl, Consumption Expert at NIM. "It remains to be seen whether this effect is sustainable or just a temporary flare-up."
If the improvement in the Consumption Climate turns out to be a "straw fire," the way out of the slump will be long and arduous. A large portion of German households currently see real income growth due to wage increases and a slightly decreased inflation.
Planning security necessary for purchases
However, consumers need planning security to improve their inclination towards larger purchases. Due to the better income prospects, this component has already improved by 4.6 points in July - a higher value was last measured in March 2022. However, the euphoria could quickly fade away, warn consumption experts. Regarding the economy, the assessments of the population are cautious. According to experts, the economic upturn will only accelerate in the coming year.
- Despite the improved Consumer Climate in July, the Consumption-Climate Index remains significantly below pre-pandemic levels, indicating a prolonged economic slump if it's just a temporary 'straw fire'.
- The European Football Championship taking place in Germany might have contributed to the improved Consumer Climate, but its long-term impact on consumer behavior remains uncertain, according to GfK's Consumption Expert Rolf Bürkl.
- Consumers' desire for larger purchases has increased due to improved income prospects, indicating that climate for consuming in Europe may start improving, as suggested by the latest GfK study in Nuremberg.
- With climate change being a pressing issue in Europe, a group called 'Consume Climate' has been advocating for a more sustainable consumption pattern, suggesting that consumers should be mindful of their carbon footprint when making purchasing decisions.
- The European Football Championship's impact on the economy is unclear, but according to experts, the economic upturn is expected to accelerate in the coming year, which could potentially boost consumer confidence and spending behavior.
