Continued high inflation and the economic downturn mean that many people are less willing to spend. The German consumer climate has deteriorated.
For the first time in eight months, consumer sentiment in Germany is declining again. The consumer climate index, which the consumer research company GfK determines through a monthly survey of 2,000 people, has ended its rise.
Surprising mood swing
The index for the month of July is currently at minus 25.4 points. The value determined for the previous month of June was minus 24.4 points. Experts had expected a further increase to minus 23.0 points – the mood swing came as a surprise. “The current trend in consumer sentiment indicates that consumers are again becoming increasingly insecure,” says GfK consumer expert Rolf Bürkl.
On the one hand, persistently high inflation in Germany contributed to this. According to the Federal Statistical Office, inflation in Germany was 6.1 percent in May, after 7.2 percent in April. Until February of this year, inflation was still more than eight percent compared to the previous year.
fear of loss of incomeeat
But the fear of a further stagnating or even shrinking economy in Germany is likely to plague consumers. Leading economic research institutes assume that economic output in Germany will fall this year. The ifo Institute, for example, expects a minus of 0.4 percent in gross domestic product (GDP).
For consumers, this goes hand in hand with lower expectations of their own income. Private households assumed that they would have to accept real income losses this year in view of persistently high inflation. The willingness to spend is correspondingly lower: “This is shown, among other things, by the fact that the propensity to save is increasing again this month,” says Bürkl.
According to the market researchers, there is initially no improvement in sight. According to GfK, private consumption will shrink this year and will not boost the economy in Germany. One ray of hope could be the trend towards declining inflation rates. Loss of purchasing power persisted, but was less serious than feared.