Germany's consumer confidence improved strongly to a 13-year high at the start of the year, as a collapse in energy prices boosted disposable income and raised room for more spending, survey data from the GfK showed Wednesday.
The forward-looking consumer confidence index rose more-than-expected to 9.3 in February from 9.0 in January. This was the highest value since November 2001, when the score was at 9.6. The February reading was expected to rise marginally to 9.1.
The outlook for the consumer economy is continuing to brighten. The GfK said the domestic economy in Germany will again play an essential part in the overall economic development.
The group, however, cautioned not to underestimate the potential risks for economic development and also for consumption.
According to the survey based on around 2,000 consumers, significant increases were recorded in both economic and income expectations as well as the willingness to buy.
The economic expectations index rose 8 points to 22.5 in January. Consumers expect the economy to continue developing positively over the coming months.
Falling energy prices combined with a considerable depreciation in the euro are acting as an economic stimulus. It would boost not only exports but also companies' willingness to invest.
The income expectations indicator gained 6.8 points to 47.8 in January. The agency said the drop in inflation alongside the stable employment situation was the major reason for the positive income expectations.
The willingness to buy index increased for the fourth consecutive time in January, underpinned by the imminent increase in the value added tax. After rising by 8.3 points, the indicator came in at 57.4 points. The propensity to consume has therefore reached an eight-year peak.
In addition, consumption was also lifted by the nose-diving propensity to save, which dropped to a record low in January.
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