German consumer sentiment fall to new record low

German Gfk institute consumer sentiment index fell to record -27.4 heading into July, after a brief bounce in June (-26.2), although the latest drop in consumer morale was not as severe as economists forecasted in July (-27.7).

Compared to the same period last year (-0.3), the data show the depth of fall in consumer morale but also points to a significant slowdown in overall economic activity.

Fresh weakening in consumer morale was not a surprise as the economy remains pressured by soaring inflation which pushed the energy and food prices significantly higher, while disrupted supply chains continue to add to mounting problems, as economic activity continues to slow and boost fears of recession.

Worsening economic conditions continue to darken the outlook for consumer climate, but also to the economy as a whole, as Western sanctions on Russia start to bite, with Germany, heavily dependent on Russian energy and raw materials, feels very strong reverse impact of sanctions, with serious threats that the industry may shut on low gas supplies and serious concerns that supplies may stop completely.