New lockdown further weakens German consumer morale

German consumer morale fell for a third straight month into January, as new lockdown on surging coronavirus infections reduced income expectations and increased tendency to save.

The Gfk institute’s consumer sentiment index fell to -7.3 in January from -6.8 previous month, but below expected 8.8 points drop, marking the lowest reading since July and significant drop from January 2020 9.7 rise.

Although the government reduced sales tax to stimulate domestic demand, it failed to spark stronger spending, keeping intact prevailing trend of saving.

Germany imposed a lockdown from early November, under which shops remained opened and restaurants, bars and entertainment venues were closed, but measures failed to reduce the number of infections that prompted the government to impose stricter lockdown from mid-December, until at least January 10.

Government officials expect stricter measures to be extended well into new year as long as new coronavirus cases remain high and recovery can be expected only on significant drop in infections that would result in relaxing measures.