Researchers based in Nuernberg published monthly surveys on the sentiment and spending of German citizens.

Consumer sentiment in Germany deteriorated in June, reflecting assessments of weakening purchasing power and an economy losing momentum under the pressure of higher borrowing costs, according to data from market research group GfK.

Citizens' expectations for income, and especially for the economy, have worsened again recently, GfK found in its consumer climate study for the month drawing to a close.

Researchers based in Nuernberg published monthly surveys on the sentiment and spending of German citizens.

“The current movement in consumer sentiment once again shows increased uncertainty,” said GfK consumer expert Rolf Buerkl.

“This is also reflected, among other things, in the renewed strengthening of the tendency to save this month,” he added.

Over the past eight months, consumer sentiment had been improving slightly from month to month, but in the June survey GfK is forecasting a slight deterioration for the first time in several months.

Stubbornly high inflation in Europe's largest economy, currently standing at around six percent, “is noticeably eroding citizens' purchasing power and preventing private consumption from making a positive contribution,” Buerkl said.

However, as he added, inflation is currently easing, which could signal better days ahead.

Consumer sentiment is also affected by the conflict within the ruling coalition over the proposed household heating law, which envisages replacing systems powered by fossil fuels with more environmentally friendly ones.

Concern over the potential initial costs of new heating systems is holding back investment in other areas, GfK said.

Households covered by the survey expect weaker purchasing power this year, given persistently high inflation that wage increases will not offset.

They are also significantly more pessimistic in their forecasts for the economy, given the continued increase in key interest rates in the eurozone.

The German economy slipped into recession in the first quarter, which was also reflected in the eurozone's results, and the European Central Bank says it is not yet finished with raising interest rates, despite weakening activity.

GfK conducts a monthly survey among approximately 2,000 citizens for the purposes of researching consumer sentiment. The results were taken from GfK's Consumer Climate MAXX survey commissioned by the European Commission.

Source: poslovni.hr