According to the latest report, Germany's consumer sentiment continued its fragile recovery in May 2025. The headline index rose by a moderate 0.9 points to minus 19.9, its highest since November 2024 and 0.1 point above the consensus forecast. Notably, economic and income expectations improved; the economic outlook climbed by 5.9 points to a two-year high of 13.1, and income expectations gained 6.1 points, bolstered by favourable wage settlements and easing inflation (2.1 percent in April). Yet, this optimism remains partially muted.

Paradoxically, consumers are still hesitant to spend. Willingness to buy dropped by 1.5 points to minus 6.4, and the savings indicator rose to 10.0 points, suggesting households remain cautious amid concerns over trade tensions, volatile stock markets, and fears of prolonged stagnation. The divergence between rising optimism and weak spending highlights a more profound uncertainty.

The gap between positive sentiment and real spending intentions emphasises the fragility of Germany's recovery trajectory. The cautious mood may stall broader recovery momentum if economic and political uncertainties persist. This latest update takes the RPI to minus 8 and the RPI-P to minus 1, meaning that economic activities are within the expectations in Germany.

The consensus sees the index pretty stable at minus 20.0 in June versus minus 20.6 in May.

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.