The consumer climate remains subdued, with the January 2025 figure standing at minus 21.3 points, 0.7 points above consensus estimates but historically still very weak. While this reflects a 1.8-point improvement from December's revised figures (minus 23.1), it remains deeply negative. This slight recovery was supported by modest gains in income expectations and buying willingness. A reduced willingness to save, now at 5.9 points, also signals marginal optimism, but persistent economic and job security concerns limit any significant rebound.

Economic expectations stabilised after months of decline, gaining 3.9 points to reach 0.3 points, matching levels from the previous year. Nonetheless, muted growth forecasts and economic stagnation dampen hopes for a sustained recovery. The income sentiment indicator also edged up to 1.4 points after a sharp November slump but remains well below summer levels, reflecting continued uncertainty amid rising unemployment and diminished real income growth prospects for 2025.

Buying willingness showed slight gains, climbing to minus 5.4 points, but remains constrained by high food and energy costs, as well as rising fears of job cuts and factory closures. In summary, the broader picture reflects stagnation and puts the German RPI and RPI-P at minus 4 and minus 5 respectively. This means that economic activity in general is performing within market expectations.

Forecasters look for a modest improvement to minus 22.0 from minus 23.3 in December.

GfK's consumer climate survey asks around 2,000 German consumers every month about their assessment of economic conditions. The questions focus on economic and income expectations and consumers' willingness to buy. Having calculated the differences between the positive and negative responses for each question the results are synthesized into a single number that reflects overall consumer expectations for the coming month.

Any insight into household expenditure is vital to understanding how the economy as a whole is shaping up. The monthly correlation between the GfK consumer gauge and actual spending is not especially high but trends in the index can offer useful information about potential underlying developments in consumer behavior. As a forward looking indicator, the GfK index is one input used by analysts in the construction of their forecasts of future German retail sales.