German consumer sentiment is forecast to hit another record low in August as concerns about gas supply are added to those about the supply chain and the Ukraine war, a survey showed on Wednesday.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, dropped to -30.6 points heading into August, beating the record low posted just a month before - July's reading was a revised -27.7. The plunge in consumer morale, based on a June 30-July 11 survey, was lower than analysts' forecast of -29.0, according to a Reuters poll. On top of concerns about supply chains, the war in Ukraine and rising energy and food costs are now fears that there won't be enough gas come winter, said GfK consumer expert Rolf Buerkl.
"This is currently causing consumer sentiment to plummet," he said. "Especially since a short supply of natural gas is likely to put even more pressure on energy prices and thus inflation." The institute said that in order to turn around sentiment, consumers needed to be reassured that there's adequate gas supply and that all possibilities for alternative suppliers are used to replace any shortfall in Russian gas.
Germany raised its gas storage targets for autumn and unveiled new energy-saving measures last week after the Nord Stream 1 pipeline, which runs on the bed of the Baltic Sea from Russia to Germany, restarted pumping gas after a 10-day maintenance but only at 40% of capacity. AUG 2022 JUL 2022 AUG 2021 Consumer climate -30.6 -27.7 -0.4 Consumer climate components JUL 2022 JUN 2022 JUL 2021 - willingness to buy -14.5 -13.7 14.8 - income expectations -45.7 -33.5 29.0 - business cycle expectations -18.2 -11.7 54.6 NOTE - The survey period was from June 30 to July 11, 2022. 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. (Reporting by Miranda Murray; Editing by Nick Macfie)