Consumer Sentiment in Europe Stable in January

Consumer sentiment in Europe stabilized in January after a wave of pessimism at the end of 2024, according to a preliminary monthly survey by the European Commission. The index measuring consumer expectations in the eurozone slightly increased in January, by 0.3 points compared to December, to minus 14.2 points, the EC reported on Thursday.

In December, it had fallen by one point, with significantly more pessimistic assessments from citizens regarding the general state of the economy in their home country and subdued purchasing plans. The value of the index measuring citizens’ expectations in the EU remained at the December level in January, when it amounted to 13.3 points.

The survey thus showed that consumer sentiment in Europe remained below the long-term average in January, the Commission noted, which conducted the survey from January 1 to 22 in 25 EU countries, excluding Ireland and Spain. The data covers 86.9 percent of total final private consumption in the eurozone and 88.8 percent in the EU.

The wave of pessimism at the end of last year coincided with accelerated price growth in both the eurozone and the EU in December, to 2.4 and 2.7 percent, respectively, according to calculations by the European statistical office. In November, prices had risen by 2.2 percent in the euro area and by 2.5 percent at the Union level.

Household consumption is also limited by high borrowing costs. In mid-December, the European Central Bank (ECB) slightly lowered interest rates again, noting that financing is still constrained because monetary policy is restrictive and because companies and citizens are repaying old loans at higher interest rates.

The impact of restrictive monetary policy is expected to gradually weaken, and domestic demand should recover, they added in a statement from the December meeting. The EC will publish a complete report on economic sentiment at the end of the month.