German Consumer Confidence Rises on Economic Resilience

By Don Nico Forbes

German consumer confidence picked up, with perceptions of the economy bolstered by resilient growth despite lingering inflation concerns due to geopolitical uncertainty.

Germany's consumer-climate index, published Thursday by the Nuremberg Institute for Market Decisions and GfK, rose to minus 26.6 in its forecast for September, from minus 29.4 in August. This exceeded the expectations of economists polled last week by The Wall Street Journal, who anticipated a reading of minus 29.2.

The index was driven by consumer economic expectations, which picked up for the fourth month in a row.

"Although the economic outlook in late summer is still more than six points below the corresponding level of the previous year, the fourth consecutive increase indicates a slight upward trend," said Rolf Buerkl, head of consumer climate at NIM.

The German economy has this year proved resilient to disruption stemming from the war in the Middle East. While higher oil prices have continued to pile pressure on both consumers and businesses, the economy grew 0.3% in the second quarter. Growth was largely driven by stronger exports, though retail trade also performed better than expected, according to Germany's statistics agency.

"Signals from the economy are also generally positive… Business sentiment has also improved slightly: The Ifo Index rose three times in a row between May and July, and the Purchasing Managers' Index is currently signaling a slight expansion," Buerkl said.

In addition, income expectations hit their highest level in six months, the report showed.

Still, consumer confidence remains below pre-war levels, and uncertainty in the Middle East is expected to continue weighing on sentiment over the course of this year. The Bundesbank said last week that GDP is likely to expand only slightly, if at all, in the third quarter.

Meanwhile, elevated inflation continues to threaten household purchasing power. With eurozone inflation close to 1 percentage point above the European Central Bank's 2% target, the risk that businesses will pass on price increases to consumers continues to grow.

Economists at Santander expect inflation to rise to 3.4% in August and 3.5% in September, and remain above 3.5% until March next year.

"The renewed rise in oil and gas prices, persistently elevated refining margins, the gradual withdrawal of government support and unfavorable base effects all point to sustained energy inflation pressures," they said.

Write to Don Nico Forbes at don.forbes@wsj.com

(END) Dow Jones Newswires

August 27, 2026 02:14 ET (06:14 GMT)