German consumer confidence falls

The GfK consumer climate survey fell to 4.9 points for June from a revised 5.6 figure for May, even though analysts indicated towards a 5.8 figure for June.

The reason for the slump is mainly due to the fact that rising inflation in the month has affected consumer confidence, as the economic outlook has been made bleak by inflationary fears.

The record high petrol prices and other price increases have combined to weaken the global economy, which in turn has created unease within the consumers of Europe’s largest economy as the turbulent financial markets have created uncertainty and price instability.

With the German economy growing at 1.5 percent, the way in which the economy performs in the rest of 2008 will likely depend on the strength and continued demand from emerging markets.

Despite the fact that business confidence rose in May and unemployment declined in April, the German economy is slowing and a strong setback in the second quarter is the consensus amongst analysts.

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