German consumer mood improves slightly but war worries persist

German consumers remained troubled by the impact of the war in Ukraine despite a modest improvement in their confidence heading into June, according to a key survey published Wednesday.

Pollster GfK’s forward-looking barometer rose to minus 26 points for June, up from minus 26.6 the previous month, an historic low for the indicator.

The improvement in consumer sentiment was “marginal”, GfK consumer expert Rolf Buerkl said.

“Despite the relaxation of coronavirus-related restrictions, the Ukraine war and inflation above all are weighing on the mood of consumers,” Buerkl said.

The outbreak of the war has driven increases in the cost of energy, food and raw materials for which Ukraine and Russia are key suppliers.

As a result, inflation in Germany rose to a multi-year high of 7.4 percent in April.

The GfK survey of some 2,000 people also found that Germans were “moderately” more positive about the prospects for the economy, with the indicator rising by 7.1 points to minus 9.3 points in May.

Despite the improvement, the figure was almost 50 points below the surveyed value at the same time last year when German coronavirus restrictions were loosened.

Income expectations rose slightly to minus 23.7 points in May, up by 7.6 points from the previous month. The “explosive” increase in the cost of living as a result of the war kept the indicator at an “extremely low level”, the GfK said.

sea/mfp/rl