The Germany’s Gfk consumer confidence index for the month of July has fallen to -27.4 points from -26.2 in June (figure revised downwards from -26), thus reaching its historical minimum. The market consensus expected an even bigger drop, to -27.7.
After a brief respite in the previous month, consumer sentiment in Germany continues its downward spiral in June. Both economic and income expectations such as the propensity to buy have suffered losses. As a result, GfK forecasts -27.4 points in consumer sentiment for July, down 1.2 points from June this year. These are the results of the GfK Consumer Climate Study.
Consumer sentiment has reached a record low. Since data began to be collected for all of Germany in 1991, the current value is the lowest ever measured. “The ongoing war in Ukraine and disruptions to supply chains are causing energy and food prices, in particular, to skyrocket, resulting in a consumer climate bleaker than ever,” he explains. Rolf Burkl, consumer expert at GfK. “Above all, the rise in the cost of living, which is currently almost 8%, is weighing heavily on consumer sentiment and causing them to enter a downward spiral.
Apart from the end of the war in Ukraine, the key factor for a sustained change in consumer sentiment is the reduction of high inflation rates. First of all, the European Central Bank must provide support in the form of an appropriate monetary policy. However, any measures that are put in place must be carefully considered to prevent excessively tight monetary policy from plunging the already ailing German economy into recession, the Gfk statement argues.
Source: Fx Street
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