-- Consumer confidence in Germany hit a three-year low, weighed down by falling income and economic expectations as higher energy prices due to the Iran war continue to fuel inflation worries.
The consumer climate indicator for May declined to -33.3 points from a revised -28.1 points in April, market research company Growth from Knowledge said in its latest consumer climate survey published Monday. The reading marks the indicator's lowest level since February 2023.
The consensus estimate for May was -30.2 points, based on Investing.com data.
In April, the indicator for income expectations plunged 18.1 points to -24.4 points, while economic expectations for the next 12 months fell 6.8 points to -13.7 points as consumers become increasingly concerned that a prolonged war poses a "serious" setback to Germany's economic growth.
"Income expectations are literally collapsing because of rising inflation. And in this context, people also currently believe that the timing for major purchases is less favorable," said Rolf Bürkl, head of consumer climate at the Nuremberg Institute for Market Decisions.
Consumers' willingness to buy is also becoming more pessimistic, with the indicator hitting a two-year low of -14.4 points, down from the previous month's -10.9 points. Meanwhile, their willingness to save remains at a "high level" of 16.1 points, despite slightly decreasing by 2.4 points.
"The inflation rate in Germany rose from 1.9 percent to 2.7 percent in March due to rising energy prices caused by the war in Iran, leading the majority of consumers to once again expect price increases," GfK noted. "Although the indicator for price expectations rose somewhat less sharply in April than in March-likely due to falling prices at the filling stations, the indicator's level has risen compared to the beginning of the year."