German consumer confidence plummets amid rising energy costs and geopolitical fears
While consumer willingness to make major purchases and the inclination to save have yet to show significant shifts this month, income expectations are noticeably darkening amid growing inflation fears.
After starting the year in positive territory, consumer income expectations have plummeted by 12.6 points, falling back into pessimistic territory at –6.3 points. According to the authors of the consumer climate study, this decline is driven in part by a sharp deterioration in economic outlook. At the same time, surging energy prices have fueled inflation concerns among the public, sending price expectations soaring.
For now, however, the propensity to buy remains largely unaffected, registering only modest losses at –10.9 points compared to the previous month. Similarly, the inclination to save—which reached a new high in February not seen since 2008—has stabilized at a very high level of 18.5 points in March.
"The drop to –28 points reflects a clear deterioration in consumer sentiment," explained Rolf Bürkl of the Nuremberg Institute for Market Decisions (NIM), which co-conducts the monthly survey. "While spending and saving behavior have so far shown little reaction to geopolitical developments in Iran, consumers anticipate that rising energy prices will push inflation higher and once again slow economic recovery." According to the findings, 60 percent of Germans expect oil, gas, and fuel prices to remain permanently high. "Naturally, this weighs heavily on consumer morale."
The study also reveals that uncertainty among consumers is growing due to the Iran conflict: Over 90 percent of respondents who expect a significant deterioration in their financial situation believe the world will become more unstable in the coming years as a result of the war.
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