German consumer confidence falls for first time since October

German consumer confidence fell for the first time since October, reflecting the fall of Europe's largest economy into recession, according to a survey published on Wednesday.

GfK said its forward-looking survey of around 2,000 people fell to -25.4 points in July from 24.4 points in June, marking its lowest point since last October's -42.8 points, amid surging inflation soared and consumer worries over energy costs.

German inflation has come down from its peak late last year but remained high in May at 6.1%, while the economy recorded its second-consecutive quarter of negative growth over the first three months of 2023, pushing it into recession.

The drop in consumer confidence "indicates that consumers are becoming increasingly unsettled again", said GfK expert Rolf Buerkl.

"Continued high inflation rates of about six percent are noticeably pinching households' purchasing power."

The GFK said pessimism among consumers could lead them to rein in spending and keep them from "making a positive contribution" to economic growth this year.

"A ray of hope could be the trend in recent months that inflation rates are falling further," it said.

Reporting by Frank Prenesti for Sharecast.com