Consumer confidence in Germany deteriorated significantly in April amid the Russia-Ukraine conflict, according to a monthly study published by the Nuremberg-based market research institute GfK.
Due to the “explosion in energy prices” and high inflation, the forward-looking GfK indicator for May slumped 10.8 points to a historic low of minus 26.5 points, according to the study based on interviews of around 2,000 German consumers published on Wednesday.
Germany’s inflation rose to 7.3 per cent in March, hitting a 40-year high, according to the Federal Statistical Office (Destatis). While food prices only increased by 6.2 per cent year-on-year, prices for household energy and motor fuels soared by 39.5 per cent.
The price development dealt a “severe blow to consumer sentiment,” GfK consumer expert Rolf Buerkl said.
“Hopes of a recovery from the easing of pandemic-related restrictions have finally been dashed.”
Uncertainties due to the Russia-Ukraine conflict and sanctions against Russia also caused German consumers’ income expectations to slip. The corresponding indicator dropped by 9.2 points to minus 31.3 points in April, the lowest value since early 2003, just before the US invasion of Iraq, Xinhua news agency reported.
German consumers’ expectations of the development of the overall economy also continued to suffer significant losses, dropping by 7.5 points to minus 16.4 points. According to GfK, consumers saw an “acute risk of recession”.
In late March, the German Council of Economic Experts slashed its economic forecast for 2022 from 4.6 per cent to 1.8 per cent.