German Consumer Confidence Outlook Bleak

German consumer confidence has fallen amidst growing fears of the fallout from the worldwide credit crisis and rising food and drink prices within the economy, according to a survey published today by analysts GfK.

In the survey released by GfK, higher food and drink prices along with unrest as a result of the global credit crisis were shown to be likely to have an impact on German consumer confidence over the short term into the month of October, which could be an early warning of weaker consumer spending in months to come.

The GfK group consumer sentiment index, looking forward to October in its predictions, reflected a decline from 7.4 points to 6.8 points, highlighting a perceived downturn in consumer confidence over the period as a direct consequence of global economic unrest and higher food prices within the German economy.

The rising cost of wheat worldwide has been held responsible for price inflation amongst dairy products and meat, as an essential component in animal feeds and many foodstuffs, which is thought to have had a drastic impact on consumer outlook for the near future.

The index also reflected a German consumer worry as to the continuation of high oil prices, which is likely to continue to be a problem for the manufacturing industry and resulting in higher energy costs for business and consumer users.

The German economy has been relatively unsettled in the wake of the sub-prime crisis, which has hit investors hard. With stock markets experiencing turbulent trading for a number of weeks, analysts had hoped that the recent Federal Reserve interest rate cuts would spur consumer confidence for the near future.

Analysts have considered the figures ‘disappointing’, particularly given positive news from neighbouring France earlier on in the week. However, many are optimistic that the news will not signify a wider downturn in the German economy.

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