BERLIN, (Reuters) – German consumer sentiment is expected to worsen at the beginning of next year because of Omicron coronavirus. This variant of Omicron Coronavirus is clouding Europe’s biggest economy.

According to the GfK institute, its index of consumer sentiment, which is based on an analysis of approximately 2,000 Germans and was revised from -1.8 points one month ago, dropped to -6.8 in January.

This January reading was lower than June’s and was compared to a Reuters forecast of a smaller fall of -2.5.

Rolf Buerkl, GfK economist, stated that the rising infection rates from the fourth coronavirus virus wave have already prompted renewed restrictions by many service and retail providers.

Germany bans unvaccinated persons from non-essential establishments in the first of each month to curb rising Omicron cases.

Buerkl stated that Christmas has been badly affected by the 2G rule, which prevents people from getting vaccinated.

Buerkl stated that the outlook for next year’s beginning is subdued considering the spread of Omicron.

In Germany, the inflation rate is unusually high and has been causing a decline in consumer confidence.

State premiers and Chancellor Olaf Scholz are expected to meet later Tuesday and discuss further restrictions.

JAN 2022 DEC-2021 JAN 2020

Consumer climate: -6.8 to1.8 -7.5

DEC 2021 DEC 2030 Consumer Climate Products

Willingness to Buy 0.8 9.7 36.6

Income expectations 6.9 12.9 3.

Business cycle forecasts 17.1 31.0 4.

Note: This survey was conducted between Dec. 2-13th, 2021.

Forecasts of the consumer climate indicate the growth in real private consumption over the next 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 states that an increase of just one percentage point in this indicator would correspond to 0.1% growth in private consumption over the previous year.

The “willingness-to-buy” indicator is the ratio of positive and negative responses.

The income expectations subindex represents household expectations regarding the future development of their finances over the next twelve months.

This index also includes additional business cycle predictions. It is a reflection of how people assess the economy’s future.