By Reuters

People walk next to a Doner kebab and Currywurst booth at Kurfuerstendamm shopping street during Christmas season in Berlin, Germany. REUTERS

(Reuters) - German consumer sentiment is set to edge lower heading into July as households' increased willingness to save counteracts improving income prospects, a survey indicated on Thursday.

The consumer sentiment index, published by GfK market research institute and the Nuremberg Institute for Market Decisions (NIM), fell to -20.3 points from a slightly revised -20.0 points the month before.

Analysts polled by Reuters had predicted a slight rise, to -19.3.

"After three consecutive increases, the consumer climate has thus suffered a slight setback," said Rolf Buerkl, consumer analyst at NIM.

"This is primarily due to the increased willingness to save," he said, which jumped 3.9 points to 13.9 points - its highest level in more than a year.

"A high willingness to save among consumers is also an expression of their continuing uncertainty," Buerkl noted, citing unpredictable U.S. trade policies as one factor.

Income expectations, on the other hand, continued their recovery for the fourth straight month, rising 2.4 points to 12.8 points, supported by favourable wage agreements and moderate inflation.

Economic expectations also climbed seven points to 20.1 points - the highest level since the outbreak of the Ukraine war - as consumers anticipate recovery driven by a 500-billion-euro ($580.15 billion) defence and infrastructure stimulus package.

NOTE - The survey period was from May 30 to June 11, 2025.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.

The "willingness to buy" indicator represents the balance between positive and negative responses to the question: "Do you think now is a good time to buy major items?"

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects respondents' assessment of the general economic situation over the next 12 months.

($1 = 0.8618 euros)

Reporting by Miranda Murray, Editing by Rachel More

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