BERLIN – German consumer sentiment is projected to fall to another record low in July, as the Ukraine war and interrupted supply chains push up energy and food prices even further, a survey showed on Tuesday.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, dropped to -27.4 points heading into July after posting a short-lived recovery in June with a revised reading of -26.2 points.
“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,” said Rolf Buerkl, GfK consumer expert.
The latest plunge in consumer morale, based on a June 2-13 survey, was however not as severe as an analysts’ forecast of -27.7, according to a Reuters poll.
In May, German inflation rose to 8.7% – its highest level in nearly half a century – as the fallout of Russia’s invasion of Ukraine built on existing bottlenecks caused by the pandemic.
JUL 2022 JUN 2022 JUL 2021
Consumer climate -27.4 -26.2 -0.3
Consumer climate components JUN 2022 MAY 2022 JUN 2021
– willingness to buy -13.4 -11.8 13.3
– income expectations -30.2 -27.4 30.8
– business cycle expectations -11.6 -11.5 52.2
NOTE – The survey period was from June 2 to 13, 2022.
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% in private consumption.
The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”
The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.
The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.
(Reporting by Rachel More, Editing by Miranda Murray)