“The so far unsuccessful efforts to find a solution to the debt crisis in Greece and ward off the country's imminent bankruptcy appear to be dampening the economic outlook for consumers,” market research company GfK said in a statement.
That was, in turn, weighing on consumers' willingness to open their purses and spend money. At the same time, households' income expectations rose to their highest levels since unification, the statement said.
News of the subdued mood among consumers came just a day after a sharp dip in the widely-watched Ifo business confidence index.
Looking ahead to next month, GfK's headline household confidence index was forecast to slip fractionally to 10.1 points in July from a rise of 10.2 points in June.
“Despite the slight drop, private consumption in Germany remains the main pillar supporting the economy. But the latest development shows that the consumer climate is also vulnerable to international risks,” GfK said.
“The battle to resolve the Greek debt crisis is escalating and it is looking ever more likely that the country will default. And that could cause the economic motor to start stuttering,” it warned.
The outlook for Europe's top economy is beginning to cloud over, according to other leading sentiment indicators, but analysts insist recovery is not yet jeopardised, as a weaker euro and falling oil prices provide a boost to the country's exporters and a robust labour market and rising wages fuel domestic demand.
SEE ALSO: Merkel greets 'progress' in Greece talks