German consumer sentiment dropped for the third month in a row in February due to current incidence of infection and ongoing COVID-19 measures, according to latest data from the German Retail Association (HDE).
Consumers are feeling reluctant to spend, especially with regard to planned purchases and economic expectations, and private consumption at the beginning of 2022 is expected to be restrained.
The inclination to purchase products has collapsed compared to the previous month and has reached an all-time low, HDE added.
Many shoppers are refraining from making larger purchases, that can be postponed, as a result of restrictions on local shopping and the uncertainty regarding the further development of COVID-19.
The propensity to save has also reduced, with consumers wanting to invest less income in consumption over the next few weeks as well as put less money in their savings accounts.
In view of the recent positive assessment of the income situation, this does not result in a consistent picture, the HDE noted.
The HDE said personal income expectations increased compared to the previous month and the previous year.
Against the background of the current wave of infections, consumers and economic research institutes do not expect an economic recovery any time soon.
In addition, the high inflation rate and the expectation of increasing prices are affecting consumer sentiment.
According to the HDE, consumers will begin the new year with a gloomy mood due to the pandemic.
Restrained development in private consumption is to be expected in the first quarter.
A trend reversal can only be expected once the current COVID-19 wave has passed and the incidence of infection has subsided, it added.