Inflation has been lower recently, but prices continue to rise. This is having a negative impact on consumer sentiment. According to market researchers, the consumer climate has fallen to its lowest level in 15 years.
“Everything is getting more expensive” – this observation has accompanied shopping for months and is dampening consumers’ desire to spend. The market research companies GfK and NIM expect that the consumer climate will continue to be dampened in view of stubborn inflation. For November they expect their consumer climate indicator to decline by 1.4 points to minus 28.1 points.
Food prices put a strain on households
“Above all, the high prices for food are weakening the purchasing power of private households and are ensuring that private consumption will not support the economy this year,” explained the market researchers.
Private households’ economic expectations have improved slightly. According to GfK and NIM, a sustainable recovery is not in sight this year. In addition, consumers’ income expectations have recently fallen again. “Income prospects are still in the stranglehold of inflation,” said consumer expert Rolf Bürkl from NIM.
Company bankruptcies are unsettling
A lower value for propensity to consume was last measured during the financial and economic crisis in 2008. “In addition to the high inflation, the fact that unemployment has recently increased somewhat again may also play a role,” explained Bürkl. The concern is increased by increasing corporate bankruptcies, which also cause uncertainty. “All of this is putting a damper on German citizens’ spending habits.”
“Consumers are keeping their heads down. Confidence and optimism are not common words at the moment,” commented Alexander Krüger, chief economist at the Hauck Aufhäuser Lamp bank, on the figures. “It is primarily fears about the future that are weighing on consumption. Consumption is keeping the economy on the path to recession. With the CO2 price rising at the beginning of the year, the next dip in the wallet is already imminent.”
All consumption is examined
GfK conducts monthly interviews with consumers about their economic expectations, their income expectations and their propensity to buy. For the current survey, around 2,000 people were surveyed from October 5th to 16th. Since this month, the data has been evaluated and published together with the Nuremberg Institute for Market Decisions (NIM), the founder of GfK.
According to GfK, the consumer climate refers to total private consumer spending, i.e. not only to retail but also to services, travel, rent and health services.