German consumer sentiment rises for 2nd month despite inflation - GfK

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Shoppers wear mask and fill Cologne's main shopping street Hohe Strasse (High Street) in Cologne, Germany, 12, December, 2020. REUTERS/Wolfgang Rattay

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BERLIN, Oct 27 (Reuters) - German consumers kept their spirits high heading into November despite rising inflation, as the mood improved for the second month in a row, according to a survey on Wednesday.

The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, rose to 0.9 points for November, from a revised 0.4 points a month earlier.

The reading compared with a Reuters forecast for -0.5.

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However, the institute warned that the good feelings were unlikely to last if prices continued to climb, a trend that would also delay a fundamental recovery in consumer sentiment .

"German citizens seem to be expecting even more price hikes, which is why they consider it prudent to make purchases now to avoid even higher prices," said GfK expert Rolf Buerkl.

Inflation accelerated at a higher pace than expected in September, German government data showed, rising by 4.1% year-on-year compared with 3.4% in August. read more

The government expects consumer price inflation to surge to 2.9% this year, a source told Reuters on condition of anonymity. Economy Minister Peter Altmaier will present the updated economic forecasts during a news conference on Wednesday.

While the propensity to buy rose slightly, both economic and income expectations were on the decline, GfK said.

This indicates that consumers in Europe's largest economy are confident about the country's recovery, though the spectre of companies scaling back production due to supply chain problems continues to loom over many who fear for their income.

NOTE - The survey period was from Sept. 30 to Oct.11, 2021.

The consumer climate indicator forecasts the development of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year ago.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.

The "willingness to buy" indicator represents the balance between positive and negative responses to the question: "Do you think now is a good time to buy major items?"

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.


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Reporting by Miranda Murray Editing by Riham Alkousaa and Christina Fincher

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