Nuremberg, January 29, 2025 – Consumer sentiment in Germany begins the new year with a bumpy start. Both economic and income expectations as well as the willingness to buy suffered losses in January. The willingness to save, on the other hand, recorded slight increases. As a result, the Consumer Climate declines in the forecast. Compared to the previous month (revised -21.4 points), a decrease of one point to -22.4 points is forecast for February 2025. These are the current findings of the GfK Consumer Climate powered by NIM, which has been published jointly by GfK and the Nuremberg Institute for Market Decisions (NIM), the founder of GfK, since October 2023.

In addition to the negative trend in income expectations and the willingness to buy, the decline of the Consumer Climate is also being driven by a rising willingness so save: It has risen by 2.3 points compared to the last month of the previous year and currently stands at 8.2 points.

“The Consumer Climate has suffered another setback and starts gloomy into the new year. The few hopes of a cautious recovery that emerged after the rise in the previous month were dashed. Since the middle of last year, we have seen a stagnating trend at best, while in the first half of 2024 the signs were still pointing to recovery,” explains Rolf Bürkl, consumer expert at NIM. “A sustainable recovery in the Consumer Climate is currently not in sight, especially as the inflation rate has also risen again recently.”

Economic pessimism increases slightly at the start of the year

At the end of 2024, Germans’ opinion of how the general economic situation in Germany will develop over the next 12 months improved slightly. However, this was apparently just a flash in the pan. The indicator suffered a setback at the start of 2025: It falls by 1.9 points and currently stands at -1.6 points.

According to first calculations by the Federal Statistical Office, the German economy shrank by 0.2 percent last year. This is the second year of recession in a row. In 2023, the decline was 0.3 percent. And the growth prospects for this year are also rather moderate. Forecasts have recently been permanently revised downwards and currently stand at around half a percent growth in real gross domestic product.

Income expectations start the new year with slight losses

Assessments about how the financial situation of one’s own household will develop in the next 12 months are also less positive. This is because at the start of the year, income expectations have lost around half of their gains from the previous month. The indicator lost 2.5 points and now stands at    -1.1 points. Last December, it had still gained 4.9 points.

Looking at the development of the income indicator over the past year, it is characterized by two different phases: The first half of the year was dominated by a noticeable recovery in income expectations, which was then replaced by a downward trend in the second half. This trend corresponds with the real income development of private households in Germany, which was particularly positive in the first half of 2024.

Willingness to buy in the wake of declining income prospects

The declining income prospects are a key reason for the weaker willingness to buy. The indicator lost 3 points and fell to -8.4 points. This is the lowest value since August 2024, when -10.9 points were measured.

The inflation rate in Germany has recently increased again. According to initial preliminary calculations by the Federal Statistical Office, prices rose by 2.6 percent in December compared to the previous year. This is likely to have had a dampening effect not only on income prospects but also on consumer spending. In addition, the ongoing news of factory closures and production relocations is causing increasing concern among the population about their own jobs. This is also affecting the consumer sentiment.