Germany: Fears of Inflation Dampen Consumer Mood
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Findings of the German GfK Consumer Climate Study for May 2008
Rising inflation in May of this year has clouded the mood among consumers. The economic outlook indicator, income expectations and the propensity to buy all suffered considerable losses. As a result, the consumer climate indicator for June is forecasting a value of 4.9 points after a revised 5.6 points in May.
Gasoline prices constantly hitting new record highs and further looming price increases are causing German consumers to worry about their purchasing power. This has led to income expectations being assessed less positively than in the prior month. Price increase expectations also meant that the propensity to buy fell sharply in May. Concerns about price stability and uncertainty resulting from the crisis on the financial markets and the flagging US economy are currently fueling economic fear amongst German consumers. This has resulted in the economic downturn becoming somewhat more pronounced than at the beginning of the year.
The significant gains in economic expectations last month could not be maintained in May. The indicator dropped back by almost 10 points to stand at 13.4 points.
After three months of successive growth, income expectations incurred marked losses in May. The indicator fell by 14.8 points to stand at -4.3 points. As a consequence, the gains made over the previous three months were almost completely negated.
In the wake of falling income and economic expectations, the propensity to buy also suffered major losses in May. The indicator dropped back 15.7 points, to now stand at -20.4 points.
The more pessimistic development of consumer mood in May has dealt a considerable blow to the consumer climate. The general indicator is forecasting a value of 4.0 points for June after a revised 5.6 points for May.
Source: GfK Gruppe
[...] Mutual Fund Investments wrote an interesting post today onHere’s a quick excerpt Findings of the German GfK Consumer Climate Study for May 2008 Rising inflation in May of this year has clouded the mood among consumers. The economic outlook indicator, income expectations and the propensity to buy all suffered considerable losses. As a result, the consumer climate indicator for June is forecasting a value of 4.9 points after a revised 5.6 points in May. Gasoline prices constantly hitting new record highs and further looming price increases are causing German consumers to wo [...]