German consumer sentiment has once again dropped, with expectations falling more sharply than in the previous month. According to the GfK and the NIM Institute, consumers are particularly pessimistic about their expected income, though the propensity to save experienced a slight decline and remains at a historically high level.
The decline in consumer confidence was attributed largely to the ongoing geopolitical tensions, particularly referencing the conflict with Iran.
Specific data points show a sharp downturn in expectations: consumer income predictions plunged by another 18.1 points in April, now registering at -24.4 points. This decline was driven by falling economic forecasts and rising price expectations, indicating a strong link between projected inflation and expected income. Consequently, purchasing intentions saw a drop of 3.5 points, reaching -14.4 points, which represents a two-year low when viewed over a longer time frame. However, the willingness to save softened slightly, settling at -2.4 points-still a high level of caution (the measured rate was 16.1 points).
Rolf Bürkl of the NIM Institute noted that, “Consumer sentiment has dropped more significantly than in the previous month, landing at -33.3 points. This is the lowest value recorded since February 2023”. He explained that income expectations are plummeting due to increased inflation, leading people to view the timing for major purchases as less favorable overall.
Furthermore, the general outlook for the German economy remains weighed down by the conflict situation, as consumers assessed the next 12 months less positively than the preceding month. This indicator lost another 6.8 points, falling to -13.7 points, mirroring similar levels seen in April 2022 when the Ukraine conflict began. The study authors concluded that consumers are growing increasingly worried that any modest economic recovery could face serious setbacks, particularly if the current conflicts persist and government measures fail to generate tangible improvements.
