The institute's consumer sentiment index fell to -25.5 heading into September from a slightly revised -24.6 in August, below expectations of analysts polled by Reuters of a reading of -24.3.
"The chances that consumer sentiment can sustainably recover before the end of this year are dwindling more and more," said GfK consumer expert Ralf Buerkl.
Persistently high inflation rates are hindering any improvement in consumer sentiment, said Buerkl.
Since consumer sentiment is likely to remain at a low level in the coming months, private consumption will not make a positive contribution to overall economic development this year and will instead be a burden on growth prospects in Germany, the GfK said.
Breaking down the components of the consumer climate index for August 2023, the figures were as follows:
- Willingness to buy: -17.0
- Income expectations: -11.5
- Business cycle expectations: -6.2
Comparing these figures to the previous month, July 2023, shows a decrease in willingness to buy (from -14.3 to -17.0) and a decrease in income expectations (from -5.1 to -11.5). Business cycle expectations also declined from a positive 3.7 in July 2023 to -6.2 in August 2023.
These values were collected during the survey period from August 3 to August 14, 2023.
Read More: German Inflation Continues To Fall In July
Consumer Climate Indicator
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% 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.
Additional reporting by ESM