Belgium, (Brussels Morning Newspaper) The German GfK market research company’s survey results released today show consumer confidence in a continuing decline that is largely driven by inflation and the increased uncertainty brought about by the war in Ukraine, Reuters reports.
According to GfK, its consumer sentiment index for April dropped to negative 15.5 points, down from negative 8.5 points in March and at its lowest level since February of last year. Analysts responding to a poll by Reuters had predicted on average that the index would drop to negative 14 points.
“In February, hopes were still high that consumer sentiment would recover with the easing of pandemic-related restrictions”, GfK consumer expert Rolf Bürkl stated, but “the war in Ukraine caused these hopes to vanish into thin air.”
Stability required for recovery
The conflict plus EU sanctions against Russia mostly affected energy prices leaving him to conclude that the cessation of hostilities followed by peace talks are prerequisites for long-term recovery of consumer confidence in Germany.
“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”, Bürkl noted.
The survey was based on a sample of some 2,000 respondents and was conducted between 3 and 14 March.
GfK pointed out that its consumer climate index forecasts real private consumption a month in advance and that an index above zero indicates annual growth. An index change of one point corresponds to a change of 0.1% in private consumption on the annual level, it said.
The index stood at negative 6.1 points in April 2021, negative 8.5 points in March this year and negative 15.5 points in April.
GfK’s “willingness to buy” indicator, which represents the ratio between negative and positive answers to the question “do you think now is a good time to buy major items,” stood at 22.3 points in April last year, 3.9 points in March this year and negative 22.1 points in April.
The indicator that reflects respondents’ assessment of the general economic situation in the next 12 months stood at 17.7 points in April 2021, 24.1 points in March this year and negative 8.9 points in April.