Recent figures from research group GfK indicate that consumer demand has held strong despite the impact of rising prices and higher borrowing costs. Although the consumer confidence index experienced a drop in July, coinciding with a decline in retail sales due to record rainfall, this setback followed a period of five consecutive months of growth and a 17-month high in June.
Despite inflation and increased food prices straining budgets, the outlook for the economy remains positive. The index tracking changes in personal finances over the past year has improved by 10 points compared to August 2022, and the forecast for personal finances over the next year is also up by 28 points from last year and four points from July.
Expectations regarding the general economic situation have also improved, with a three-point increase in the index since the previous month and a 30-point improvement compared to a year ago. Major purchase intentions saw an eight-point rise, while the savings index increased by one point, reflecting higher interest rates benefiting savers.
While the cost of living remains a challenge, wage growth has outpaced inflation in the private sector for the first time in almost two years. The overall index score increased by five points, though it still remains in negative territory at -25 as of August.