German consumer confidence to decline in May amid higher prices, GfK says

April 28, 2011 - 0:0

German consumer confidence will decline for a second month in May as households grapple with higher food and energy prices, GfK AG said.

The Nuremburg-based market research company on Wednesday forecast that its consumer sentiment index, based on a survey of about 2,000 people, will fall to 5.7 next month from 5.9 in April. Economists predicted a decline to 5.8, according to the median of 26 estimates in a Bloomberg News survey.
Political turmoil in the Middle East and uncertainty over the duration of Japan’s nuclear crisis have pushed crude oil prices above $112 a barrel, fueling inflation and damping the global economic outlook. At the same time, Germany’s economy, Europe’s largest, is booming as companies increase investment and hiring to meet export orders.
“Higher prices, the nuclear disaster in Japan and the escalating political unrest in North Africa and the Middle East all mean that the general conditions for German consumers no longer appear quite as positive at present,” GfK said in a statement. “As an export nation, Germany is particularly dependent on a settled and secure global economic environment.”
GfK’s measure of households’ economic expectations declined to 47.3 in April from 49.5 in March. A gauge of income expectations fell to 35 from 40.5, while an index of consumers’ willingness to spend eased to 34.2 from 34.3.
German inflation will accelerate to 2.6 percent in April from 2.3 percent in March, according to a Bloomberg survey of economists. The European Central Bank this month raised interest rates from a record low to combat price pressures across the 17- nation euro region.
(Source: Bloomberg)