German consumer climate dimmed by Iran conflict

Consumer sentiment in Germany has fallen again in the wake of the war in Iran and its impact on household finances, according to the latest study released on Monday.

The consumer climate index dropped once more in the most recent survey by the Nuremberg Institute for Market Decisions (NIM) and the GfK. Income expectations have collapsed, reaching their lowest level since February 2023.

Willingness to spend on major purchases fell for the third consecutive time, to its lowest point in two years. Economic expectations dropped to levels last seen before the start of the war on Ukraine. The propensity to save eased slightly.

"Income expectations are closely linked to consumers' inflation expectations," the Nuremberg-based consumer researchers wrote in their analysis.

"Income expectations are literally collapsing because of rising inflation. And in this context, people also currently believe that the timing for major purchases is less favourable," said Rolf Bürkl, consumer expert at NIM.

There are growing concerns among consumers that Germany's tentative economic recovery could suffer a serious setback — particularly if the war in the Middle East continues and government measures fail to take effect.

The monthly consumer climate study is conducted on behalf of the European Commission and surveys 2,000 people each time. The survey was carried out between April 2 and 13.