By Ed Frankl
Consumer confidence in Germany weakened for the second consecutive month in data for October, as consumers prioritized more savings over spending amid a gloomy economic picture.
Germany’s forward-looking consumer-sentiment index forecasts confidence to fall to minus 26.5 in October, from minus 25.6 in September, according to data from market-research group GfK published Wednesday.
The reading misses expectations of minus 26.0, according to a consensus of economists polled by The Wall Street Journal.
However, GfK’s sub-indexes for the current month–September–showed improving expectations for the incomes and the economy, but consumers appeared to pivot more to boosting their savings over consumption.
“Although economic expectations have risen somewhat and both income expectations and the propensity to buy have shown minimal growth, the propensity to save has risen significantly, causing consumer sentiment to fall again,” GfK consumer expert Rolf Buerkl said.
The index recording propensity to save, which reflects consumers’ near-term concerns for the economy, rose to its highest level since April 2011, GfK said.
Persistently high inflation due to rising food and energy prices has dragged down consumer sentiment, and chances of a recovery there have “probably fallen to zero,” Buerkl said.
Key to improving domestic demand is falling inflation, Buerkl said, though he cautioned that it isn’t possible yet to determine when it can be brought down to the European Central Bank’s target of 2%.
The ECB raised rates by a quarter-point at its most recent meeting, likely further squeezing household incomes in the meantime.
Write to Ed Frankl at firstname.lastname@example.org