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Consumers confident despite inflation worries

Consumers in Germany are still optimistic about economic developments at home, a closely-watched survey by the GfK market research group has shown. But inflation worries may soon change the picture.GfK market researchers presented their latest consumer confidence index Thursday, pointing out that their forward-looking survey for April slipped to 9.8 points from 10 points a month earlier.

The reading was slightly short of analysts’ expectations, but far from signaling a dramatic change, GfK said, while offering an explanation for the marginal drop in confidence.

“Increased inflation in Germany and stronger fears about purchasing power apparently prevented a broader-based recovery.”

Consumer prices rose by 2.2 percent in February, reaching their highest level since August 2012, with rising energy costs and higher food prices eating into consumers’ spending power.

Lower inflation soon?

“The slightly weak phase in consumer confidence will come to an end when inflation falls back,” GfK predicted, adding that private consumption would no doubt remain a pillar of overall economic development.

The pollsters found that respondents expected the current strength of Europe’s largest economy to continue.

Largely positive data have kept coming in for Germany in recent weeks even as it battles uncertainty on a number of fronts, including upcoming elections in France, Brexit and US President Donald Trump’s tough talk on Germany’s trade surplus.

hg/jd (AFP, dpa)

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