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German consumer confidence is set to fall sharply in January largely due to the restrictions imposed amid the fourth wave of the pandemic and rising inflation, survey results from the market research group GfK showed on Tuesday.

The forward-looking consumer sentiment fell to -6.8 in January from -1.8 in December. The expected reading was -2.7.

High incidences due to the fourth wave of the corona pandemic with further restrictions as well as significantly increased prices are increasingly affecting the consumer climate, Rolf Bürkl, GfK consumer expert, said.

The prospects for the beginning of the coming year are also subdued against the background of the rapid expansion of the Omicron variant, Bürkl added.

Economic and income expectations and the propensity to buy declined significantly in December, the survey showed.

Largely due to supply chain issues, the economic sentiment index fell 13.9 points to 17.1. This was the third decline in a row. A lower value for economic sentiment was last measured eight months ago.

For the third time in a row, the income expectations posted a noticeable decline. The indicator fell by six points to 6.9 points in December.

Rising prices for energy and food are weakening the purchasing power of consumers’ incomes. In addition, there is a risk that a so-called wage-price spiral will be set in motion in the medium and long term, the survey revealed.

At the same time, the propensity to buy slid to 0.8 in December from 9.7 a month ago.

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