Consumer sentiment set to decline amid Iran conflict

German consumer sentiment is expected to deteriorate further in April as concerns grow over the economic impact of the ongoing conflict in Iran, according to a survey released on Thursday.

The forward-looking consumer sentiment index dropped to -28.0 for April, down from -24.8 in March, falling short of analysts’ expectations of -27.3.

While consumer behaviour in March showed little immediate change, with spending and saving patterns remaining relatively stable, income expectations weakened significantly.

Rising inflation fears driven largely by higher energy prices have weighed heavily on households.

The income expectations index plunged 12.6 points to -6.3, reflecting growing pessimism about financial prospects.

Similarly, the economic expectations index fell 11.2 points to -6.9, marking its lowest level since December 2022.

The survey, conducted jointly by NIQ/GfK and the Nuremberg Institute for Market Decisions, highlights mounting anxiety among consumers that Germany’s fragile economic recovery could be derailed if the geopolitical crisis persists.

In spite of these concerns, willingness to buy held steady at -10.9, while the willingness to save remained elevated at 18.5 after reaching its highest level since 2008 in February.

“Consumers are increasingly expecting inflation to rise again due to higher energy prices, while the broader economic recovery may slow,” said Rolf Bürkl, head of consumer climate at the institute.