BERLIN, (Reuters) – German consumer sentiment is expected to decline in March. The sharp increase in COVID rates in the early February as well as high inflation numbers overshadowed positive long-term prospects.

According to the GfK institute, its index of consumer sentiment, calculated from an online survey of approximately 2,000 Germans and based on that month’s results, dropped to -8.1 points in March, from -6.7 points one month prior. This was the first rise after two months of declining.

Reuters analysts polled had in average forecast that the index would improve to -6.3.

Rolf Buerkl, GfK’s consumer expert said that the hope for a rise in prices at the start of the year has been dashed as the inflation rate remains high.

Buerkl stated that mid-term outlooks were also much brighter because the government decided to remove far-reaching restrictions on pandemics.

It is possible to believe that this will lead to consumers spending more. The expert stated that if this was supported by moderate price increases, consumers could eventually recover in the long-term.

This survey was conducted between February 3 and 14, just before the German government accepted to relax coronavirus restrictions for spring.

MAR 2022 FEB 2020 MAR 2030

Climate for consumers -8.1-6.7-12.7

FEB 2022 JAN 202 FEB 2020

4.4.2 – Willingness to purchase 1.4 5.2

– income expectations 3.9 16.9 6.5

Expectations for the business cycle 24.1 22.8 8.0

Note: The survey period ran from February 3, 2022, to February 14, 2022.

The indicator predicts real consumption in the coming month.

If the indicator is above zero, it indicates year-on–year growth in private consumer consumption. Below zero means that the indicator is showing a decrease in consumption relative to the same time last year.

GfK says that a change of one point in the indicator equals 0.1% annual change in private consumption.

The “willingness-to-buy” indicator is how positive and negative reactions to the question, “Does this seem like a great time?”

The Income Expectations sub-index measures household financial expectations for the next 12 months.

An additional index of business cycle expectancies reflects respondents’ assessment about the economy in the coming 12 months.