German Consumer Confidence Lowest in Five Years

29 July 2008

NÜRNBERG, Germany: The killer combination of spiralling energy prices and the Western hemisphere's economic downturn has toppled German consumer confidence to its lowest level in over  five years, reports researcher GfK.

The firm's August index will report a fall from a revised 3.6 in July to 2.1, the lowest reading since June 2003. This is far lower than economists' consensus guess of a fall to 3.5.

The data, culled from a sample of around 2,000, is further depressed by record oil and food prices that drove German inflation to 3.4% last month.

This, in turn, put pressure on disposable incomes alongside the growing strength of the euro and backlash from the worsening US housing slump - all diminishing demand for German exports.

Business confidence, meantime, took an even bigger hit to undergo its biggest fall since the 9/11 terrorist attacks in 2001.

Investor confidence also fell to a record low, suggesting that growth in Europe's largest economy is decelerating.

GfK chief executive Klaus Wuebbenhorst told Bloomberg Television: "Three things are weighing on sentiment: inflation, inflation and inflation. And the European Central Bank raising rates also makes consumer loans more expensive."

Data sourced from (Germany); additional content by WARC staff