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Business

Pre-election German consumer confidence takes soft blow

A German market research group has indicated German consumers may be starting to lose faith in their future financial situation. While their willingness to buy things is still high, their outlook has slightly worsened.

German GfK market researchers said Wednesday their monthly barometer gauging consumer confidence in Europe's biggest economy edged up slightly to 7 points in June.

This reached a level not seen in six years. In 2006 consumers in Germany were equally willing to go on a shopping spree, albeit for different reasons. Back then, they brought forward many purchases because of a looming increase in valued-added tax.

GfK economists said today consumers were willing to buy even expensive things because of a lack of sound savings alternatives with record-low interest rates in place.

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Consumer confidence buoys German economy

But while people didn't mind spending a lot of euros on purchases right now, they were not so sure any more about their future financial situation, GfK stated. It predicted their benchmark index to drop slightly to 6.9 points in September which would bring a long surge of confidence to a halt.

But analysts didn't appear to worry too much about the forecast, pointing to a low inflation and a robust German labor market.

"Food prices have gone up significantly of late which is why consumers fear they will have less to spend in their pockets over the next couple of months," HSBC Trinkaus economist Rainer Sartorius told Reuters news agency. "But I wouldn't construe that as trend reversals yet as the economic frame conditions remain favorable and unemployment low."

hg/hc (AFP, Reuters, dpa)

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