A surge in coronavirus infections in Germany and unusually high inflation rates are weighing on the consumer morale in Europe's largest economy, dampening the business prospects for the upcoming Christmas shopping season, a survey showed on Thursday.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, fell to -1.6 points heading into December, from a revised 1.0 points a month earlier.
The December reading was the lowest since June and compared with a Reuters forecast for a smaller drop to -0.5.
GfK economist Rolf Buerkl said the fourth wave in the COVID-19 pandemic, with skyrocketing infection rates and hospitals reaching capacity limits, was causing concerns that more restrictions for shops and restaurants were on the cards.
At the same time, inflation rates of more than 4% were hurting the purchasing power of consumers, he added.
"Together, this is all dampening the business prospects for the upcoming Christmas shopping season," Buerkl said.
Consumers' expectations for their personal income and the development of the economy both deteriorated which pushed down the propensity to buy to a nine-month low.
The grim outlook for household spending means that the economy is likely to stagnate in the final three months of the year as the industrial sector is already struggling with severe supply chain problems.
The German central bank said on Monday that the economy was taking "a breather" as a lack of goods and labour as well as new coronavirus restrictions put an end to a fragile recovery. urn:newsml:reuters.com:*:nL8N2SD264
DEC 2021 NOV 2021 DEC 2020 Consumer climate -1.6 1.0 -6.8 Consumer climate components NOV 2021 OCT 2021 NOV 2020 - willingness to buy 9.7 19.4 30.5 - income expectations 12.9 23.3 4.6 - business cycle expectations 31.0 46.6 -0.2
NOTE - The survey period was from Nov. 4-15, 2021.
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 ago.
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.
((FOR BACKGROUND AND HISTORICAL DATA, DOUBLE-CLICK ON GFK01))
(Reporting by Michael Nienaber,) ((michael.nienaber@thomsonreuters.com; +49 30 2888 5085; Reuters Messaging: michael.nienaber.reuters.com@reuters.net www.twitter.com/REUTERS_DE www.reuters.de))
