According to GfK, German consumers were more uncertain than ever in June 2022. At minus 27.4 points, consumer sentiment has never been lower since the first German consumer climate survey in 1991. Above all, German consumers are more pessimistic about their own income than they have been for decades. According to the latest findings, a sustainable turnaround in consumer sentiment depends not only on the end of the war in Ukraine but, above all, on reducing high inflation rates. The European Central Bank is primarily called upon to support this with an appropriate monetary policy. However, these measures should be carefully weighed so as not to send the already struggling German economy into recession due to an overly restrictive monetary policy.
After a brief recovery in May of this year, the economic outlook also suffered additional losses in June. The indicator lost 2.4 points and fell to -11.7 points. Compared with the corresponding period of the previous year, the drop is actually almost 70 points. Consumers continue to see a significant risk of the German economy slipping into recession. Supply chain problems and the Ukraine war are currently hampering production in Germany. In addition, high inflation threatens to eliminate private consumption as an important pillar of economic growth.
In the wake of falling economic and income expectations, the propensity to buy also suffered a setback. The indicator lost 2.6 points and now stands at -13.7 points. The last time a lower value was measured was during the financial and economic crisis in October 2008 (-20.1 points).
The dwindling purchasing power due to inflation is also increasingly reflected in the consumers’ propensity to shop. If private households have to pay significantly more for energy and food, fewer financial resources are available, especially for larger purchases.
