Inflation, global unrest upsetting consumers

Inflation, global unrest upsetting consumers
Photo: DPA

German consumer sentiment has been hit by fears of inflation and an unsettled international environment, causing the first dip in an important confidence index in 10 months, the GfK institute said Tuesday.


The institute's survey of 2,000 German households in early March resulted in an indexed 5.9 points for April, down from a revised value of 6.0 points in March, a GfK statement said.

GfK uses its findings to publish an estimation for the following month in Europe's biggest economy.

"The recently more uncertain international environment and growing fears of inflation led to a slight downturn in consumer sentiment in March," GfK said.

The poll was taken before the March 11 earthquake and tsunami that ravaged Japan and set off a nuclear crisis at the Fukushima Daiichi power plant north of Tokyo, so it is possible that sentiment will be weaker next month as well.

The consumer sentiment survey's three components, economic expectations, income expectations, and propensity to buy, all declined in GfK's latest survey.

"Ongoing unrest in North Africa and the Middle East, as well as soaring energy and commodity prices, are the main reasons for the slight slowdown this year of the strong momentum seen in the economy in 2010," the statement said.

The overall index nonetheless remained at a relatively high level, the research group noted. And despite a small decline in shopper's propensity to mull large purchases, "private consumption will continue to play an important role in macroeconomic development," it said.

Inflation stood at 2.1 percent in March, unchanged from the previous month, provisional data released Tuesday by the national statistics office showed. The estimate by the Destatis office followed four consecutive inflation increases in Europe's biggest economy.

ING senior economist Carsten Brzeski noted that "the increase in inflation expectations is a clear warning that higher energy prices are the main threat for the recovery."

But, he added: "Apparently, it is currently not as easy to alienate German consumers as it used to be in the past."

AFP/The Local/mry



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