A surge in coronavirus infections in Germany and unusually high inflation rates are weighing on the consumer morale in Europe's largest economy, dampening the business prospects for the upcoming Christmas shopping season, a survey showed on Thursday.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, fell to -1.6 points heading
into December, from a revised 1.0 points a month earlier.
The December reading was the lowest since June and compared with a Reuters forecast for a smaller drop to -0.5.
GfK economist Rolf Buerkl said the fourth wave in the COVID-19 pandemic, with skyrocketing infection rates and hospitals reaching capacity limits, was causing concerns that more restrictions for shops and restaurants were on the cards.
At the same time, inflation rates of more than 4% were hurting the purchasing power of consumers, he added.
'Dampening The Business Prospects'
"Together, this is all dampening the business prospects for the upcoming Christmas shopping season," Buerkl said.
Consumers' expectations for their personal income and the development of the economy both deteriorated which pushed down the propensity to buy to a nine-month low.
The grim outlook for household spending means that the economy is likely to stagnate in the final three months of the
year as the industrial sector is already struggling with severe supply chain problems.
The German central bank said on Monday that the economy was taking "a breather" as a lack of goods and labour as well as new coronavirus restrictions put an end to a fragile recovery.
