Germany: Consumer sentiment expected to drop to all-time low in October
September 29, 2022
The GfK consumer climate index is forecast to drop from minus 36.5 in September to a new all-time low of minus 42.5.
The expected deterioration in sentiment came on the back of backward-looking data for September, which is released simultaneously and underpins the October expectation. Sentiment deteriorated across the board, with economic and income expectations as well as propensity to buy all falling deeper into pessimistic territory. Income expectations fell to its lowest level on record, which began in 1991. Consumer sentiment received a blow from the fallout of the war in Ukraine; the German economy is expected to slip into a recession over the winter months.
Historically-low consumer sentiment will translate into softer household consumption growth as consumer turn more cautious. Analysts at the EIU added:
“Retail sales in Germany comprise about one-third of all household spending. […] We forecast that retail sales volumes will decline by 3% in 2022. This decline will stem mainly from the hit to household purchasing power and buying intentions amid the spike in inflation and heightened caution linked to the conflict.“
Author: Jan Lammersen, Economist