BERLIN—German consumer morale is projected to inch up in June after falling to a record low in May, but high inflation and the war in Ukraine continue to weigh on household spending, a survey showed on Wednesday.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, rose slightly to -26.0 points heading into June after hitting a revised all-time low of -26.6 points in May.
The latest reading, based on a May 5–16 survey, was in line with analysts' expectations, according to a Reuters poll.
"The consumer climate may have improved slightly, but consumer sentiment is still at an absolute low," GfK consumer expert Rolf Buerkl said in a statement.
"Despite further easing of coronavirus-related restrictions, the Ukraine war and above all the high inflation are weighing heavily on the mood of consumers," he added.
The institute said that to see a sustainable reverse in the downward trend, the conflict would need to be brought to an end via successful peace talks and the inflation rate must be noticeably slowed down with the help of the European Central Bank.
Late last month, Germany's economy ministry cut its economic growth forecast for 2022 to 2.2 percent from 3.6 percent and predicted that inflation this year would reach 6.1 percent.
JUN 2022 MAY 2022 JUN 2021
Consumer climate -26.0 -26.6 -6.9
Consumer climate components May 2022 April 2022 May 2021
—willingness to buy -11.1 -10.6 10.0
—income expectations -23.7 -31.3 19.5
—business cycle expectations -9.3 -16.4 41.1
NOTE—The survey period was from May 5–16, 2022.
The consumer climate indicator forecasts the development of real private consumption in the following month.
An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.
According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 percent in private consumption.
The "willingness to buy" indicator represents the balance between positive and negative responses to the question: "Do you think now is a good time to buy major items?"
The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.
The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.