FRANKFURT: The mood among German consumers has reached an all-time low, according to a key survey published Tuesday, as the war in Ukraine drives a painful wave of inflation.
Pollster GfK’s forward-looking barometer fell to minus 27.4 points for July, the lowest figure since the series started in 1991.
The deterioration in the index was due “above all” to the rising cost of living, GfK consumer expert Rolf Buerkl said in a statement.
The outbreak of the war has driven increases in the cost of energy, food and raw materials for which Ukraine and Russia are key suppliers.
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Inflation rose to 7.9 percent in May, the highest rate since German reunification in 1990 and well above the two-percent target of central banks.
“Broken supply chains”, which have likewise contributed to higher prices, were also behind the darkening mood among consumers, Buerkl said.
The GfK survey of some 2,000 people also found that Germans were again more pessimistic about the prospects for the economy, with the indicator dropping by 2.4 points to minus 11.7 points in June.
Consumers saw a “big risk” that the German economy would fall into recession as a result of the war in Ukraine and inflation, the GfK said.
Income expectations fell to minus 33.5 points in June, down by 9.8 points from the previous month, the lowest value in almost 20 years.
High inflation rates were “melting away” consumer purchasing power, GfK said.
Money saved during the pandemic would likely not translate into increased consumer spending “to the extent hoped for”.
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