Ukraine war sinks German consumer

BERLIN: According to a crucial study released Wednesday, consumer sentiment in Germany has reached an all-time low as Russia’s invasion of Ukraine erodes trust in Europe’s largest economy.

GfK’s forward-looking barometer plummeted to minus 26.5 points in May, down from negative 15.7 points in April.

According to GfK, the decline indicates a “new historic low.”

The previous low point was in May 2020, when the index fell by 23.1 points amid the initial coronavirus pandemic lockdowns.

“The war in Ukraine and high inflation have dealt a serious blow to consumer sentiment,” said Rolf Buerkl, a consumer analyst at GfK.

“This has put an end to hopes of a recovery as a result of the easing of pandemic-related restrictions,” he said.

In March, inflation in Germany reached 7.3 percent, the highest level since German reunification, owing to rising energy prices and interrupted supply chains, both of which were exacerbated by the conflict.

“High inflation rates are eroding consumer purchasing power,” GfK said.

As a result, income expectations plummeted from minus 22.1 points in March to a negative 31.3 points in April.

The GfK study of 2,000 respondents also discovered that Germans were substantially more pessimistic about the status of the economy in April, with the indicator plummeting 7.5 points to minus 16.4.

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