• Germany's news in English

German consumer confidence hits five-year low

AFP · 28 Jul 2008, 11:35

Published: 28 Jul 2008 11:35 GMT+02:00

Facebook Twitter Google+ reddit

The confidence index compiled by the GfK institute fell to 2.1 points from 3.6 points in its previous survey, with an indicator of economic and income expectations dropping especially sharply.

"The positive momentum generated by the job market and the beneficial wage and salary increases compared with last year are consequently being demolished by inflation," GfK said.

In June, consumer prices in the biggest European economy rose by 3.3 percent in June on a 12-month basis, the biggest increase since December 1993. "Record price increases, triggered primarily by rocketing energy prices, are leaving consumers increasingly fearful of their purchasing power," GfK said.

Income expectations fell to their lowest level since November 2005, owing to "growing fears of a recession and the fact that the crisis in the financial markets seems far from over," it added.

With the euro's rise in value hampering Germany's export-led economy, the government had hoped that thrifty German consumers would begin to hit the stores owing to lower unemployment and substantial pay raises. But GfK said that "consumers will no doubt be putting the brakes on their purchasing in the belief that in the future, a large proportion of their household budget will be going towards energy costs."

UniCredit Markets economist Alexander Koch said Germany had seen "several consumer recessions" since the high-tech bubble burst, and recalled the results of a recent German business climate survey by the Ifo research institute that showed sentiment plunging to a 34-month low point in July.

"Continuing high pressure on the purchasing power as well as the darkening economic outlook, underscored by last week's plunge in the Ifo, clearly argue against private consumption becoming the required pillor in the second half of the year, with the next consumer recession already lurking around the corner!"

GfK's survey of some 2,000 consumers found that "the number of Germans worried about price rises has more than doubled within the space of one year." An indicator that measures consumers' propensity to buy lost a relatively modest 2.5 points from the previous survey, but was down 35 points on a 12-month basis at minus 26.2 points.

Story continues below…

UBS analyst Martin Lueck commented that "a substantial recovery in consumer spending has now become very unlikely."

"Both sentiment indicators and hard industrial data have recently shown that a massive slowdown is underway," prompting the Swiss bank to forecast that Germany's economy would grow by around 2.0 percent this year and 1.0 percent in 2009.

Facebook Twitter Google+ reddit

Today's headlines
Couple accused of torturing, murdering women go on trial
The so-called 'house of horrors' in Höxter where the couple allegedly tortured and killed women. Photo: DPA.

A couple accused of luring women to their village home with personal ads started trial on Wednesday over charges that they tortured and killed at least two of their victims.

After July attacks, govt drafts new video surveillance law
Photo: DPA

The Interior Ministry is drafting a law which will enable public spaces to be filmed for surveillance purposes as a reaction to deadly attacks in July, according to a newspaper report.

Eurowings union threatens cabin crew strike for Thursday
Photo: DPA.

A union representing cabin crews on Lufthansa's budget airline Eurowings has announced that strikes will start as of Thursday if ongoing contract negotiations continue to falter.

Merkel: murky internet giants distort perception of reality
Angela Merkel. Photo: DPA.

Chancellor Angela Merkel called on Tuesday for internet giants to make public their closely-guarded algorithms, claiming that they are not giving people diverse enough information.

Pegida leader 'paid court costs with group's money'
Pegida leader Lutz Bachmann. Photo: DPA.

The leader of the anti-Islam movement reportedly used money from Pegida's coffers to pay for two personal court cases, German media reported this week.

Anger as Berlin scraps Turkey concert on Armenia genocide
The Dresden Symphony Orchestra. Photo: DPA

Germany's foreign ministry Tuesday scrapped a planned symphony performance on the Armenian "genocide" in its Istanbul consulate, sparking accusations that it was caving in to Turkish pressure.

Obama to visit Berlin in last presidential trip to Germany
President Barack Obama and Chancellor Angela Merkel during a Berlin trip in 2013. Photo: DPA.

The White House announced on Tuesday that US President Barack Obama will be paying one last unexpected visit to the German capital - his last before he leaves office.

Hostility towards minorities 'widespread in Bavaria'
A village in southern Bavaria. Photo: DPA.

Hate and hostility towards groups deemed to be different are not just sentiments felt by fringe extremists, a new report on Bavaria shows.

Hated RB Leipzig emerge as shock challengers to Bayern
RB Leipzig. Photo: DPA

RB Leipzig's remarkable unbeaten start to the Bundesliga season has seen them suddenly emerge at the head of the pack chasing reigning champions and league leaders Bayern Munich.

Munich taxi driver in hospital after attack by British tourists
Photo: DPA

A taxi driver had to be hospitalized in Munich on Monday evening after three British tourists refused to pay their fare and then attacked him.

Germany's 10 most weird and wonderful landmarks
Sponsored Article
Last chance to vote absentee in the US elections
10 things you never knew about socialist East Germany
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd