German consumer sentiment sees 'significant setback'

(Sharecast News) - Consumer sentiment across Germany suffered a "significant setback" this month, according to the NIM Consumer Climate survey powered by GfK, as rising energy prices dampened income expectations. The forward-looking consumer climate indicator for October fell 3.8 points to -30.6 points, GfK announced on Friday.

Analysts had expected a smaller decline to -27.4 from a revised -26.8 the month before, with the index reaching its lowest level since May.

The income expectations indicator dropped sharply, by 16.7 points to -15.0, falling to its lowest since April shortly before the introduction of the fuel rebate - a tax-free relief bonus and a fuel discount for May and June.

"The majority of households expect high energy prices to reduce their purchasing power," said Rolf Bürkl, head of consumer climate at NIM. "As a result, they are more sceptical about their income expectations for the next 12 months."

At the same time, consumers' willingness to save saw a "noticeable increase", with the saving gauge rising 6.0 points to 21.5 - similar to levels not seen since the financial crisis of 2008.

The willingness-to-buy measure fell one point to -10.8, which is "extremely low" by historic standards, the survey said.

Consumers' expectations for the economy continued to rise, albeit at a slower pace, increasing half a point to -3.4.