German consumer sentiment continued to deteriorate for the fifth month in a row in April, according to the latest data from the German Retail Association (HDE).
The index touched a new all-time low as Russia’s invasion of Ukraine and its implications dampened consumers' economic and income expectations.
The HDE noted that although the magnitude of the impact of the geopolitical situation on the overall German economy cannot be fully estimated, the slump in consumer sentiment clearly shows that private consumption will be ‘severely subdued' in the coming weeks.
Respondents also expect the looming deterioration in the overall economic situation to affect their personal income situation.
Income expectations have fallen compared to the previous month to reach the second lowest value in the history of the consumption barometer.
In the coming months, consumers expect to have fewer financial resources at their disposal, and this is reflected in their propensity to buy, which has reached a new all-time low.
The survey also found that consumers plan to reduce their savings volume.
The probable consumption and saving behaviour is being influenced by rising inflation, the HDE noted.
More Price Increases
As energy prices have risen significantly in recent weeks, consumers expect more price increases in the coming months.
This assessment aligns with current economic forecasts, which also anticipate sustained upward pressure on prices for the rest of the year.
The monthly HDE consumption barometer, based on a survey of 1,600 people, focuses on the propensity to buy and save, consumers' financial situation and other factors relevant to consumption.
The barometer projects the expected mood of consumers in the next three months and does not reflect current consumer behaviour.