Germany’s consumer confidence declined further to a new record low in September as households started to build reserves to meet future energy bills, thus dampening the propensity to buy, results of the consumer climate study conducted by the market research group GfK showed Friday.
The forward-looking consumer sentiment index fell to -36.5 in September from -30.9 in August. The reading was forecast to fall moderately to -31.8.
Among components of the consumer confidence index, economic and income prospects showed minimal increases, while the propensity to buy registered slight loss in August.
The fear of significantly higher energy costs in the coming months is forcing many households to take precautions and put money aside for future energy bills, Rolf Bürkl, GfK consumer expert said. This puts a further strain on the consumer climate, since in return there are fewer financial resources available for other consumption.
The situation is likely to become even worse in the coming weeks and months if the supply of fuels, especially gas, is insufficient to meet the demand during winter. This would further stoke inflation, the research group noted.
For a sustainable recovery of the consumer climate, measures should be taken to combat inflation, GfK said.
After two consecutive declines, economic expectations gained 0.6 points to -17.6 in August.
Although the index improved from July, the risk of recession remained high. High energy prices, concerns about availability of energy coupled with delivery bottlenecks would make a recession more likely, the market research group noted.
The income expectations index rose 0.4 points to -45.3 in August from a record low. Consumers expect energy prices to escalate in the coming months. Rising prices will nibble at the purchasing power of private households and will ensure that income pessimism will not decrease significantly.
The propensity to buy dropped 1.2 points to -15.7 in August. This was the seventh consecutive decline and the lowest reading since the October 2008 financial and economic crisis.
Meanwhile, the propensity to save increased sharply by 17.6 to 3.5 in August, the highest value in more than eleven years.
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