Although at lower levels, German consumer confidence is likely to remain stable in the new year, a closely watched survey showed on Monday.
The latest survey results issued by the market research group GfK said the consumer climate indicator stood at 2.1 points for January 2009, after a revised value of 2.1 points for December. Economists were expecting a reading of 2.2 points for January. The reading for December was downwardly revised from 2.2 points.
The general GfK consumer confidence indicator is for the upcoming month, while its sub-indicators are for the current month. The "GfK consumer climate MAXX survey" is based on around 2,000 consumer interviews conducted each month on behalf of the EU Commission.
The index measuring economic expectations showed a moderate decline to reach minus 32.4 points in December. The survey found that outlook for economic growth in the German economy is hardly going to relieve the economic gloom. The forecast for 2009 was downgraded considerably on account of reduced production, a sharp fall in new car registrations and falling exports.
Meanwhile, income expectations fell to minus 15.4 from November's minus 6.9. Despite recession, consumers were comparatively optimistic over the last four months. However, this changed towards the end of the year. Actual wages and salaries are unlikely to improve much in the coming year amid the weaker job market.
On the other hand, the consumption and buying propensity index improved possibly due to the marked decline in inflationary pressure. The gauge stood at minus 6.3 points in December, up from minus 6.7 points logged in November. Households befitted from easing petrol and heating oil prices putting consumers into a better mood. But the index is still below its long term average of zero points.
According to the survey, positive factors would have a stabilizing effect on the economy next year. The inflation rate would possibly remain low, raising consumer purchasing power. Further, the collective wage and salary agreements would help to spread positive effects. As a result, consumption is expected to rise up to 0.5% in 2009, the research group said.
In a report, the Federal Statistical Office said import prices fell 1.3% year-on-year in November, in contrast to a 2.9% rise in October. The November rate was the lowest since March 2004, when prices fell 1.6%. Excluding crude oil and mineral oil products, import prices rose 3.2%.
Compared to the previous month, import prices fell 3.4% in November, following a 3.6% drop in October. Economists had expected prices to drop 2.4%.
Meanwhile, the export prices rose 1% year-on-year in November, reversing the 2% rise in October. On a monthly basis, prices fell 0.9%, which was the steepest monthly decline since January 1968, when prices declined 0.9%.
Growth in the consumer price index continued to decrease for the fourth month in a row in November. The consumer price index or CPI rose 1.4% year-on-year in November, slower than 2.4% expansion seen in October.
While inflationary pressures are decreasing, the largest Eurozone economy slipped into recession in the third quarter for the first time in five years by contracting 0.5% in the third quarter, following a decline of 0.4% in the second quarter. The government is expecting the economy to grow only 1.7% in 2008.
Earlier, German parliament's upper house, the Bundesrat, passed the EUR 32 billion or $41 billion economic stimulus plan, reports said. The approval for the Chancellor Angela Merkel government's stimulus package came amid a lot of criticism from various states.
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