The Germany’s consumer confidence index as measured by Gfk has plunged to a record low of -42.5 in September after revising the August result to -36.8 from -36.5. The result worsens the market expectations of -39 points.
After a brief respite in the previous month, consumer sentiment continues its downward spiral in September. Both economic expectations and the propensity to buy registered moderate decreases, while revenue expectations plummeted to a new record low.
The main reason for the sharp decline in consumer sentiment is the decline in earnings expectations this month. The indicator has fallen 22.4 points, to -67.7 points. This represents a new historical low. Since data began to be collected for all of Germany in 1991, the current value is the lowest ever measured.
“The current very high inflation rates, of almost 8%, are causing large losses in real income among consumers and, therefore, a significant reduction in purchasing power“, Explain Rolf Burkl, consumer expert at GfK. “Currently, many households are forced to spend much more money on energy or set aside money to pay much higher heating bills. As a result, they have to cut back on other expenses, such as new purchases. This is causing consumer sentiment to rise. plummet to a new record low.
With it currently impossible to predict when inflation will noticeably improve again, consumer sentiment will face tough times in the coming months. Negative real consumer spending will aggravate the recessionary trend of the German economy.
Source: Fx Street
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