Ukraine war set to batter German consumer sentiment - GfK
German consumer morale is likely to slump next month as the war in Ukraine pushed consumer expectations to their lowest since the 2009 global financial crisis, according to a survey published on Tuesday.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, plunged to -15.5 points heading into April from a revised -8.5 points in February.
"In February, hopes were still high that consumer sentiment would recover with the easing of pandemic-related restrictions. However, the war in Ukraine caused these hopes to vanish into thin air," said GfK consumer expert Rolf Buerkl.
"Consumers are seeing their purchasing power melt away as a result of the sharp increase in prices when it comes to gas, heating oil and gasoline."
He added that energy prices have suffered the most from rising uncertainty and sanctions against Russia, with a longer-term recovery of German consumer morale only possible if there was a quick ceasefire followed by peace talks.
Nine out of 10 Germans are extremely or very concerned about the sharp rise in prices in the energy sector. In the case of groceries, the percentage of those concerned is 80%.
"Domestic economy would then significantly contribute to overall economic development again as a result of declining uncertainty, and the easing of pandemic-related restrictions would also be able to have its positive effect," Buerkl said.
The survey took place from March 3 to March 14, after Russia’s unprovoked invasion of Ukraine on February 24.
After two consecutive increases, economic expectations – similar to income expectations – also suffered a setback in March. The indicator fell points to -8.9 points, almost touching the low of -10.4 points hit during the first pandemic-related lockdown in spring 2020.