Monday, 2 October, 2023

German consumer morale falls as outlook darkens

German consumers are heading into September feeling more pessimistic than a month earlier, a key survey showed Tuesday, as high food and energy prices and a struggling economy weigh on shoppers' minds.

Pollster GfK said its forward-looking survey of around 2,000 people fell to minus 25.5 points for September, erasing the gains made last month when the index climbed slightly to minus 24.6 points.

Consumer confidence in Europe's biggest economy "shows no clear trend" at the moment but remains "at a very low level overall", GfK's consumer expert Rolf Buerkl said in a statement.

"The chances of a sustained recovery in consumer sentiment before the end of the year are dwindling," he added, blaming "persistently high inflation rates, especially for food and energy".

The survey showed that income expectations had fallen as inflation eats away at households' purchasing power. Respondents also said they were less likely to make large purchases than the previous month.

Germany's annual inflation rate eased slightly to 6.2 percent in July but remains elevated, with food prices alone up 11 percent.

And although energy prices have cooled in recent months after soaring in the wake of Russia's invasion of Ukraine, they were still 5.7 percent higher year-on-year.

With inflation curbing demand and Germany's crucial industrial sector suffering a downturn, concerns are mounting about the wider health of Europe's powerhouse economy.

Respondents were "significantly more pessimistic" about Germany's economic outlook, the survey showed.

The economic expectations sub-index fell sharply to minus 6.2 points to hit its lowest level since last December, GfK said.