Inflation, energy fears drive German consumer morale to new low -GfK
BERLIN – German consumer morale is projected to nosedive further in October, hitting a new record low for the fourth consecutive month as high inflation rates and rocketing energy bills show no signs of relenting, a survey showed on Wednesday.
The GfK institute said its consumer sentiment index fell to -42.5 heading into October, from a downwardly revised reading of -36.8 in September.
Analysts polled by Reuters had predicted a reading of -39.0.
Income expectations in particular contributed to the plunge in morale: that subindex was at its lowest level since the survey began collecting data for unified Germany in 1991.
Any recovery in consumer sentiment would be tied to getting inflation under control, which is not foreseeable at the moment, GfK said, adding that difficult months lay ahead.
Consumer inflation rose 8.8 percent on the year in August, and analysts polled by Reuters currently expect September’s rate to reach 10 percent. The statistics office is set to release preliminary numbers on Thursday.
“Many households are currently forced to spend significantly more money on energy or set aside for significantly higher heating bills,” which leaves less money available for making new purchases, said GfK consumer expert Rolf Buerkl.
That negative real consumer spending, in turn, exacerbates the economy’s recessionary tendencies even further, said GfK.
An increasing number of consumers fear the German economy could slide into a recession, with economic expectations around the same low levels as seen during the financial crisis.
The consumer climate indicator forecasts the development of real private consumption in the following month.
An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.
According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 percent in private consumption.