GfK Consumer Confidence Drops

GERMANY GFK CONSUMER CONFIDENCE APR -15.5 (FORECAST: -14.5); MAR -8.5r

• German consumer confidence came in one point weaker than the consensus forecast, with a seven-point fall to -15.5 seen for April.
• Pre-pandemic this indicator tended to hover around the 10-point mark.
• Downside surprises were largely to be expected, as seen in a range of Friday forecasts pencilling -15 in. This all but cancels out the positive effects seen with pandemic restrictions easing in the previous print.
• March saw a downwards revision of 0.4pp to -8.5.
• The two key driving forces dampening consumer confidence are inflation and the war in Ukraine, the latter causing a notable downturn translating into a substantial decline in economic and income expectations. The fall in the propensity to buy was more moderate.
• With energy prices climbing further due to Russian sanctions and considerable food inflation, the direct reduction in disposable income is being felt by households. Income expectations declined to the lowest value since January 2009.
• Friday's data painted a similar picture, with German IFO current and future expectations slumping more than anticipated and expectations seeing a series-record fall. The UK followed suit at an October 2020 low, with UK consumer confidence highlighting cost-of-living concerns against a backdrop of wage-growth stagnation.