People in Germany are increasingly confident about the economy, with a closely-watched survey showing on Thursday that lower inflation has revived optimism for May after a stumble in April.

Market research firm GfK's forward-looking poll of 2,000 consumers jumped from 9.8 points ahead of this month to 10.2 for May, the company said in a statement, beating analysts' forecasts of only a slight increase.

"German consumers see the domestic economy on a good path in the coming months," which combined with lower inflation has boosted workers' income expectations, the pollsters found.

A sharp spike in inflation to 2.2 percent in February had cast a pall over the mood, as higher food and energy prices cut into disposable incomes in Europe's largest economy.

But the effect is fading from price growth figures, while both the federal government in Berlin and Germany's five leading economic think tanks have lifted economic growth predictions for 2017 in recent weeks.

Meanwhile, unemployment has continued at a record low since reunification in 1990 and is seen decreasing yet further in forecasts, adding to the public's feeling of security.

Confidence about jobs and growth and higher income expectations made consumers more likely to splash out on big purchases, a sub-index in GfK's survey found.

"The largely stable labour market is a dependable and strong support for consumer mood and the domestic economy," GfK said in its statement.

Its researchers have since January forecast consumption growth of 1.5 percent over the whole year.

source: AFP