German Consumer Sentiment Expected to Drop to New Record Low in July
28 June 2022 - 7:29AM
Dow Jones News
By Maria Martinez
Consumer confidence in Germany is set to fall in July to an
all-time low, as inflation and Russia's war in Ukraine weigh
heavily on household sentiment.
Market research group GfK's forward-looking consumer sentiment
index forecasts confidence declining to minus 27.4 in July from a
revised figure of minus 26.2 in June. July's figure is below the
forecast of economists polled by The Wall Street Journal of minus
27.0.
"The ongoing war in Ukraine and disruptions in supply chains are
causing energy and food prices in particular to skyrocket,
resulting in a gloomier consumer climate than ever before," GfK
consumer expert Rolf Buerkl said. Since the collection of data for
the whole of Germany started in 1991, the current value of minus
27.4 is the lowest that has ever been measured.
Above all, the increase in the cost of living is weighing
heavily on consumer sentiment and sending it into a downward
spiral, Mr. Buerkl said.
GfK uses data from three subindexes from the current month to
derive a sentiment figure for the coming month, measuring
consumers' economic expectations, income expectations and
propensity to buy.
The three indexes suffered losses in June, according to the
survey.
After a brief recovery the previous month, economic expectations
have worsened again this month, falling to minus 11.7 in June from
minus 9.3 in May.
"Consumers continue to see a significant risk of the German
economy slipping into recession," the report said.
Income expectations are continuing their rapid descent in June,
falling to minus 33.5 from minus 23.7 in May. This is the lowest
value in almost 20 years, GfK said.
In the wake of falling economic and income expectations, the
propensity to buy has also declined, with the indicator dropping to
minus 13.7 in June from minus 11.1 in May. The diminishing
purchasing power resulting from inflation is having an increasing
negative impact on the propensity to consume, the report said.
Mr. Buerkl said a sustained turnaround in consumer sentiment
continues to depend on successful negotiations to end the conflict
in Ukraine and a decline in inflation.
Write to Maria Martinez at maria.martinez@wsj.com
(END) Dow Jones Newswires
June 28, 2022 02:14 ET (06:14 GMT)
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