BERLIN (Reuters) – German consumer sentiment is expected to improve slightly at the start of next year but at a low level as high food and energy prices and job insecurity weigh on households, a survey showed on Thursday.

The consumer sentiment index, published by GfK and the Nuremberg Institute for Market Decisions (NIM), rose more than expected going into January, to -21.3 points from a slightly upwardly revised -23.1 points the month before.

Analysts polled by Reuters had expected a reading of -22.5.

GfK said the improvement only partially compensated for previous declines and sentiment remained at a very low level with stagnation stretching back to the middle of the year.

“A sustained recovery in consumer sentiment is not yet in sight, as consumer uncertainty is still too high. The main reason is high food and energy prices,” said NIM analyst Rolf Buerkl.

“In addition, concerns about job security are growing in many sectors,” he said.

Several major companies, such as Volkswagen, slash production and cut costs, raising fears of job losses. The Ifo institute’s monthly survey showed business morale was deteriorating more than expected this month.

A snap election in February is adding to uncertainty for Europe’s biggest economy which is on track for a second consecutive year of contraction in 2024 and is trailing its euro zone partners.

JAN 2025 DEC 2024 NOV 2024

Consumer climate -21.3 -23.1 -18.4

Consumer climate components DEC 2024 NOV 2024 DEC 2023

- willingness to buy -5.4 -6.0 -8.8

- income expectations 1.4 -3.5 -6.9

- business cycle expectations 0.3 -3.6 -0.4

NOTE – The survey period was from Dec. 5 to Dec. 16, 2024.

The consumer climate indicator forecasts the progress of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.

The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects respondents’ assessment of the general economic situation over the next 12 months.

The Reuters poll for the GfK consumer sentiment is from Dec. 18

(Reporting by Madeline Chambers, editing by Kirsti Knolle)