German consumer sentiment is set to pick up in May as moderating energy prices and expected wage increases help to dissipate households' initial fears about a loss in purchasing power, a GfK institute survey has shown.
The institute's consumer sentiment index improved to -25.7 heading into May from a slightly upwardly revised -29.3 in April, the seventh increase in a row and above expectations of analysts polled by Reuters of a reading of -27.9.
Below Pre-Pandemic Levels
Sentiment is back on track to recovery after a slowdown last month, but "the value still remains below the pre-pandemic level of about three years ago," said GfK consumer expert Rolf Buerkl.
"On a more positive note, income expectations are also up for the seventh consecutive month, returning to pre-Ukraine war levels for the first time," added Buerkl.
The income expectations subindex rose to -10.7 from -24.3 the month before, marking the highest value since February 2022, and comes as workers press for more pay and better working conditions to tackle higher costs of living through strikes.
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 earlier.
According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.
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