Due to rising prices, especially for energy and food, consumers have less money for other purchases. An end to inflation is not in sight.
A sudden increase in the tendency to save has caused the consumer climate in Germany to drop to a record low. This was determined by the Nuremberg consumer research company GfK in its new consumer study.
“The sharp increase in the propensity to save this month has allowed the consumer climate to continue its steep descent. It has again reached a new record low,” said GfK consumer expert Rolf Bürkl.
“The fear of significantly higher energy costs in the coming months is forcing many households to take precautions and put money aside for future energy bills. This is further depressing the consumer climate, as in return there are fewer financial resources available for other consumption”, said Buerkl. “If households have to pay significantly more for energy and food, they lack the financial means for other purchases.”
Risk of recession high for consumers
He fears that the problem could get worse in the coming months if there is not enough fuel available. That would drive prices up further, and heating bills would then be even higher. In addition, there is a risk of production restrictions in the companies. From the consumer perspective, the risk of a recession remains high. The abolition of the nine-euro ticket and the end of the fuel price tax cut will also further boost prices.
For a sustainable recovery of the consumer climate it is necessary to fight inflation, for which above all the European Central Bank (ECB) is required with a less expansive monetary policy. On the other hand, the Ukraine conflict must be resolved – the main reason for the explosive rise in energy and food prices.
On behalf of the EU Commission, GfK surveys 2,000 people every month about their situation with regard to their total private consumer spending.
Majority must restrict itself
In a survey commissioned by the Association of German Banks (BdB), one-fifth (19 percent) of the more than 1,300 respondents stated that they had to “cut down a lot” on other expenses due to the recent sharp rise in energy and food prices. Another 53 percent replied that they would have to “limit themselves a little”.
According to the survey published on Friday, when shopping, the vast majority of respondents pay attention to the price and only buy what they really need. The newspapers of the Funke media group had previously reported on the results of the survey.
Overall, according to the survey, high inflation is currently the greatest concern of people in Germany. 85 percent chose inflation from a list of issues when asked which issue was worrying them at the moment. 78 percent are very or very concerned about the future supply of energy and electricity, and 77 percent each fear a deterioration in the economic situation and an escalation of the Ukraine war.
The general rate of inflation in Germany has remained stubbornly above the seven percent mark for months, even if there has recently been some relaxation thanks to government relief. Inflation could rise again as early as autumn. According to official figures, consumer prices in Germany in July 2022 were 7.5 percent higher than in the same month last year. (dpa)