BERLIN (dpa-AFX) - Consumer confidence in Germany is set to deteriorate in August as households preferred to save rather than spend due to the escalating uncertainty, survey data from the market research group GfK revealed on Thursday.
The Consumer Climate indicator dropped unexpectedly to -21.5 points in August from -20.3 points in July. The score was forecast to improve to -19.4.
The continuing increase in the willingness to save was the major reason for the second consecutive fall in overall sentiment.
The savings indicator climbed 2.5 points to 16.4 in July, marking the third consecutive increase and also hit the highest value in almost one and a half years.
'The recovery in consumer sentiment continues to be postponed, because the willingness to save has risen again,' NIM Head of Consumer Climate Rolf Burkl said.
The majority of consumers considered it advisable to hold back their money rather than spend it on major purchases, Burkl noted. General uncertainty, the need to be prepared for difficult situations and high prices were the major reasons for the fall in spending.
Burkl said a sustainable recovery in sentiment will depend on easing uncertainty and providing greater planning security.
Income expectations for the next twelve months continued their clear upward trend in July. The index rose to 15.2, the highest in a year, from 12.8 in June.
Consumers expect their household income to rise in the coming months. In addition to solid wage agreements and pension hikes, a moderate inflation also helped to boost real income.
Despite an improvement in income prospects, the willingness to buy dropped three points to -9.2, which was the lowest since February.
Meanwhile, damping hopes of an economic recovery, economic expectations suffered a severe setback in July after rising for five straight months. The corresponding index slid 10 points to 10.1.
Uncertainty over trade tariffs continued to hold back economic optimism.
The survey jointly published by the market research group GfK and the Nuremberg Institute for Market Decisions was conducted between July 3 and 14.
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