German Consumers and the Economic Outlook 2025

75% of Germans think the high cost of living will remain a major issue in Germany in 2025. Even though inflation has bounced back to more conventional levels, consumers do not yet feel relief and perceived inflation is a source of caution.

As political instability adds uncertainty to Germany’s economic future, Germans have pessimistic macro expectations for 2025. Living in times of polycrisis forces consumers to build resilience to withstand potential adversities. Consequently, they have become used tocautious and bargain shopping to cope with the high cost of living. Based on these changed consumption habits, 67% of Germans are confident they will be able to maintain their standard of living in 2025.

While consumers will remain cautious with their spending and continue to focus on saving, brands are well-placed to explore opportunities to boost mindful spending (eg potential of dynamic pricing in foodservice) and help consumers preserve their spending power. Spending on experiences like holidays and quality time with loved ones serves as a sweet escape in gloomy times, and testifies to another strategy to cope with the polycrisis. This opens up opportunities for brands across categories to engage with consumers to expand brand visibility, for example through cooperations with domestic hotels.

This report looks at the following areas:

Germans expect the high cost of living to remain a major issue in 2025. Brands that adapt to changed consumption habits and explore new ways to engage with consumers (eg by tapping into Germans’ wanderlust) can promote consumer spending.

Dr. Jennifer Hendricks, Senior Analyst – Consumer Lifestyles, Germany

Market Definitions

This Report explores behaviours and attitudes of German consumers related to the economic outlook. The following terms are relevant in this context (mainly based/leaning on definitions provided by the OECD and official federal institutes like the Federal Agency for Civic Education):

• Cold progression: refers to a subtle form of tax increase that occurs when a pay rise is entirely consumed by inflation, yet still results in higher taxation
• Financial confidence: consumers’ expected financial situation over the next year or so
• Financial resilience: the ability of individuals or households to resist, cope with and recover from negative financial shocks
• Financial wellbeing: having control over money, ability to pursue life goals, lack of financial stress
• Inflation: a sustained process of monetary devaluation, characterised by general price increases