Germany’s consumer sentiment is set to fall again to a fresh record low in October as high inflation amid rising energy prices hit income expectations, and in turn, consumer spending, survey results from the market research group GfK showed on Wednesday.
The consumer confidence index plunged to -42.5 in October from revised -36.8 in the previous month. The score was also weaker than the economists’ forecast of -39.0.
Consumers are increasingly concerned that the economy could slide into a recession due to weak consumption. In the wake of increasing energy costs, some energy-intensive companies scaled back their production. Further production restrictions are also threatened by the ongoing supply bottlenecks due to interrupted supply chains.
“Many households are currently being forced to spend significantly more money on energy or set aside for significantly higher heating bills,” Rolf Bürkl, GfK consumer expert said.
Accordingly, they have to save on other expenses, such as new purchases, Bürkl noted. This is causing the consumer climate to fall to a new record low.
The major reason for the weakness in the consumer confidence was the sharp fall in income expectations to a historic low. At -67.7, the income expectations indicator lost 22.4 points in September to hit the lowest since the survey began in 1991.
The propensity to buy dropped for the eighth consecutive month in September as households have to spend more on energy and left with less financial resources for other expenses. The indicator fell 3.8 points to -19.5, the lowest since October 2008.
At the same time, the economic expectations index slid 4.3 points to -21.9 in September, the weakest since the financial and economic crisis.
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