German consumer confidence rose in September for the first time in five months after falling fuel prices left consumers with more to spend on items like food and clothing. The GfK forward looking consumer climate index for October increased to 1.8 from a revised 1.6. As can be seen in the chart, last months reading was very low, in fact it was the lowest level in five years.
The price of oil has fallen by almost a third from its record in July. Still, at more than $100 a barrel the cost remains 30 percent higher than a year ago and erodes spending power. At the same time, a deepening crisis on global financial markets may dim consumers' willingness to spend in coming months.
As for the sub components, after two months of marked losses, the economic outlook component was a little more positive in September. The indicator was up 6 points to -15.7. However, the value still remains around 56 points below that recorded in September 2007.
Income expectations were up for the second consecutive month, and the indicator was up by 2.7 points in September. It still remains at a very low level however, as documented by the value of 16.4 points below that September 2007.
The consumer propensity to buy was up quite. The indicator climbed by 15.1 points to reach -12.8 points. The propensity to consume, however, remained moderate, since it is still more than 10 points behind that recorded in the same period in the prior year.
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