Fear of inflation will continue to make Germans spend their money rather than saving it, the German consumer research group GfK has found. As a result, private consumption remains a pillar of growth in 2013.
Private German households were expected to boost their spending by 1 percent in real terms in 2013, GfK consumer research group said Tuesday, as it released a projection of German private consumption for the current year.
The GfK figure, which was adjusted for about 2 percent inflation, follows an increase of 0.8 percent in private consumption last year, which was said to have contributed to meager but stable annual growth of 0.7 percent in Europe's biggest economy in 2012.
Noting that in 2013, too, German consumers were going to make a stable contribution to the projected upswing, the group pointed to a robust German labor market and higher income expectations as reasons for the positive mood.
In addition, uncertainty over the ongoing debt crisis in Europe, notably fears of rising inflation, would entice them to spend their money rather than save it.
"In view of low interest rates and concerns over the euro, they tend to spend their money especially on valuable goods," the market researchers said in their report.
Therefore, GfK said it expected mounting sales primarily in the real estate sector and the home renovation business, while German retailers would see inflation-adjusted revenue fall this year.
uhe/kms (Reuters, dpa)