Frugal Spenders Shun Shopping Sprees
Consumer sentiment in Germany has taken a downturn, with the GfK Consumer Climate Indicator plummeting to -21.5 for August 2025, marking the lowest reading since April. This decline reflects increased economic uncertainty and consumer pessimism, including concerns over U.S. tariffs and general economic stagnation.
The latest survey by GfK and the Nuremberg Institute for Market Decisions (NIM) revealed a deterioration in consumer sentiment in July. The indicator for economic expectations has plummeted, reducing hopes for an economic recovery this year. Rolf Bürkl, consumer expert at NIM, stated that the recovery in consumer sentiment is still pending due to the repeated increase in savings inclination.
Regarding consumer behaviour, the propensity to make major purchases has fallen to its lowest level since February. Many consumers are postponing major purchases due to general uncertainty, high prices, especially for food, and the desire for financial security. The propensity to save, however, has risen significantly, with the savings inclination indicator climbing to 16.4 in August from 13.9 in July, the highest level since February 2024.
Contrarily, income expectations have improved steadily for five months, reaching a one-year high of 15.2 in August, up from 12.8 in July. Consumers expect an increase in their purchasing power, driven by solid wage agreements, pension increases, and a recent drop in inflation to 2%.
The survey was conducted by Nuremberg researchers between July 3 and 14, 2025. Approximately 2,000 consumer interviews were conducted monthly for the survey, on behalf of the EU Commission.
The main reason for this decline is the persistent high savings inclination among consumers. The cautious consumer stance dampens prospects for immediate consumption-driven economic growth. Despite the improvement in income expectations, consumers remain cautious and less willing to spend, instead opting to save more due to economic uncertainties and concerns about future hardships.
Personal-finance concerns continue to persist among German consumers, as the savings inclination indicator reached its highest level since February 2024 in August. This urge to save seems to be predominantly driven by general uncertainty, high prices, especially for food, and the desire for financial security.
The decline in consumer sentiment, represented by the GfK Consumer Climate Indicator, can be attributed to the cautious approach towards personal-finance management, which in turn dampens prospects for immediate consumption-driven economic growth.
