German Consumption

Last year, economists had feared that consumer spending would continue its free-fall into January off the back of poor figures for the last quarter in 2008.

But sentiment among German shoppers defied this expectation as falling energy prices and low inflation buoyed consumer expenditure.

By the end of January, Germany had exceeded the European average for consumer spending.

The GfK economic research group forecast spending would increase by 0.5 percent in 2009 despite the global economic slowdown. The organization said that the consumer climate index rose from 1.6 points last September to 2.2 points in January 2009.

"The level of unemployment is not expected to affect consumption until the end of the year and so consequently, consumers are unlikely to experience much of a crisis this year," the group said in a statement on its Web site.

"The effects of the financial and economic crisis have yet to reach consumers, and consumer mood has proven incredibly resilient in recent months," the group added.

Low inflation

GfK said it expected inflation to remain very low, and added this would strengthen German consumers' purchasing power.

"Since crude oil prices and with them, gas and heating oil prices peaked in September 2008 and then started falling rapidly, the rate of inflation has also gone down considerably," said Rolf Buerkl, a senior research consultant at GfK.

"Although the relief package now adopted will not be able to prevent the current crisis, it may stabilize the economy and the labor market and, accordingly, mitigate the recession and fear of unemployment.

But predictions for spending into 2010 aren't so upbeat, GfK said.

"Consumers will be feeling the impact of the crisis far more over the coming months and will have to adjust their daily habits and attitudes accordingly."