Germany: Consumer confidence slips in March, halting ten months of unbroken increases
March 29, 2011
Consumer confidence moderated amid uncertainty in the international arena and growing fears of rising inflation. The forward-looking GfK consumer confidence indicator inched down from 6.0 points in March to 5.9 points in April, which was less severe than the drop to 5.8 points that private sector analysts had expected. The fall marked the first drop after ten consecutive months of improving consumer sentiment, which pushed the index to a three-year high in March. While the GfK's overall consumer confidence indicator refers to April, the institute also published three sub-indices (economic expectations, income expectations and propensity to buy), which refer to March. According to the survey, all three sub-indices fell over the previous month. Economic expectations dropped by 7.6 points to 49.5 points, on the back of increasing fears of rapid growth in oil and commodity prices, together with concerns about political turmoil in North Africa and Middle East. Income expectations fell by 2.4 points to 40.5 points. According to the survey, the decline was moderate, suggesting that the ongoing improvement in the labour market and rising wages helped to stabilise households' purchasing power. In line with economic and income expectations, the propensity to buy fell over the previous month. The index now sits at 34.3 points in March, down 4.6 points from the level observed in February. According to the GfK, expectations of rising inflation have curbed the willingness to spend.
Author: Ricardo Aceves, Senior Economist