The Consumption Barometer is a future-oriented index. It therefore does not reflect current consumption, but rather consumer sentiment, which will be reflected in consumption over the next three months.
The "income expectations" sub-index measures how likely people think their own income will change in the future. When more people expect their income to go up, it means they are more likely to spend money on consumer goods, and this can have a positive effect on overall consumer sentiment.
The "economic expectations" sub-index measures how likely people think the overall economic situation in Germany will change in the future. When more people expect the economy to improve, it means they are more likely to spend money on consumer goods, and this can have a positive effect on overall consumer sentiment.
The "propensity to buy" sub-index measures how likely people are to spend money on consumer goods in the next month. When more people expect to spend more money on consumer goods, it means they are more likely to buy things, and this can have a positive effect on overall consumer sentiment.
That's why this sub-index is included in the calculation of the index in a direct way: when the values of the sub-index are high, it means that it has a positive effect on the index, and when the values are low, it means it has a negative effect on the index.
This sub-index measures how likely people are to save money in the next months. If more people expect to save money, it means they are less likely to spend money on consumer goods, and this can have a negative impact on the overall consumer sentiment, as captured by the HDE Consumer Barometer.
That's why the "propensity to save" sub-index is included in the calculation of the index in an inverse way: when the values of the sub-index are high, it means that it has a negative effect on the index, and when the values are low, it means it has a positive effect on the index.
The price expectations sub-index measures how likely people think prices will change in the future. If the price expectations sub-index is going down, it may indicate that households expect prices to rise in the future, which can lead to a dampening effect on consumer sentiment.
As households anticipate higher prices, they may be more likely to make purchases sooner rather than later, leading to higher current consumption but lower future consumption. As a result, this can also lead to a decline in the overall consumer confidence index.
The interest rate expectations sub-index measures how likely people think interest rates will change in the future. When more people expect interest rates to go up, it means they are less likely to borrow money or invest, and this can have a negative effect on overall consumer sentiment.
That's why this sub-index is included in the calculation of the index in an inverse way: when the values of the sub-index are high, it means that it has a negative effect on the index, and when the values are low, it means it has a positive effect on the index.
Source: HDE - Consumer Barometer