Consumer sentiment in Germany has fallen to a new all-time low due to rising prices.
“Since the survey of consumer sentiment for all of Germany began in 1991, no worse value has been measured,” said the market research company GfK in Nuremberg on Wednesday. The GfK index forecast for August slipped to minus 30.6 points.
“In addition to concerns about interrupted supply chains, the Ukraine war and sharply rising energy and food prices, there are now fears about an adequate gas supply for industry and private households next winter,” said GfK consumer expert Rolf Bürkl. This depresses consumer sentiment. “Especially since a scarce supply of natural gas is likely to increase the pressure on energy prices and thus inflation.”
According to GfK, consumers fear an impending recession, their economic expectations fell in July to the lowest value since April 2020 at the beginning of the first corona lockdown. Parts of the economy are threatened with production restrictions – this could lead to short-time work and slightly increase concerns about one’s own job, explained Bürkl.
The income prospects also fell to a record low, as GfK further announced. Because the high inflation rates of between seven and eight percent impaired the purchasing power of private households. “If natural gas deliveries from Russia are restricted or even stopped completely in the coming weeks, energy prices are likely to continue to rise,” Bürkl warned.
In addition, due to the current weakness of the euro against the dollar, German imports from the dollar area are becoming even more expensive. This is likely to add further pressure on prices and weigh heavily on income sentiment.
As a result, the propensity to buy also decreases – the value here fell to its lowest level since October 2008 in the middle of the financial and economic crisis. “If significantly more money has to be spent on energy and food, there is a lack of funds for other purchases,” explained Bürkl.
For its representative studies on the consumer climate, GfK conducts monthly interviews with consumers about their economic expectations, their income expectations and their propensity to buy. For the current survey, around 2000 people were interviewed from June 30th to July 11th. Consumption is considered an important pillar of economic development in Germany.
