The mood in the German economy is bad and consumers are anything but optimistic: the level of consumer sentiment is lower than ever. Above all, inflation and energy prices cause the value to fall more than expected.
The energy crisis and inflation in Germany are pushing consumer sentiment to a new record low. The barometer of the GfK market researchers in Nuremberg signals a surprisingly sharp drop of 5.7 points to minus 42.5 points in October. It falls for the fourth time in a row, as GfK announced.
Since the consumer mood survey for Germany as a whole in 1991, no worse value has been measured. Many households are currently being forced to spend significantly more money on energy or set aside for noticeably higher heating bills. "Accordingly, they have to save on other expenses, such as new purchases," said GfK consumer expert Rolf Bürkl. "This is causing the consumer climate to fall to a new record low."
The currently very high inflation rates of almost eight percent led to large real income losses among consumers and thus to a significant reduction in purchasing power. "Since it is not foreseeable at the moment when inflation will noticeably weaken again, difficult times are ahead for the consumer climate in the coming months," warned Bürkl. For the eighth time in a row, the sub-index of the so-called propensity to buy has suffered losses. The barometer fell to its lowest value since October 2008 and thus at the time of the financial and economic crisis.
"The propensity to consume is currently being put under great pressure by the increased energy prices," explained the market researchers. "For consumers, a recession is becoming more likely." Both companies and private households are worried about the explosive increase in energy costs. The leading economic research institutes also assume that Germany will not be able to prevent a recession in the winter.
The government advisers expect the economy to bottom out due to the energy crisis and then shrink, as the Reuters news agency learned from several people familiar with the matter. That is why the economists have massively cut their spring forecast. For this year, the experts expect economic growth of only around 1.4 percent and for 2023 a decline in German gross domestic product of around 0.4 percent.
