By Ed Frankl


Consumer confidence in Germany plunged to its lowest level since February 2023 as the conflict in the Middle East dimmed income expectations and hopes for a tentative economic rebound this year amid surging energy prices.

Germany's consumer-climate index, published Monday by research group the Nuremberg Institute for Market Decisions and GfK, fell to minus 33.3 in its forecast for May, from minus 28.1 for April. The 5.2-point decline is the sharpest since October 2022, as Germany's economy reeled from the last energy shock in the months after Russia's full-scale invasion of Ukraine.

The decline follows the fall of the closely watched Ifo Institute business-sentiment indicator, which tumbled to a near six-year low in April in data published Friday. Companies increasingly reported more pessimistic business expectations for the coming months amid broad-based weakness for manufacturers, services companies and in construction.

For the around 2,000 consumers surveyed, the sense of bleaker times to come is also now apparent.

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

The survey's gauge of income expectations dove 18.1 points to minus 24.4, the report showed, reflecting the burden of rebounding inflation. Consumer-price inflation jumped to 2.8% in March from 2.0% in February, according to EU-harmonized data.

The barometer of consumers' willingness to buy also weakened, while Germans' willingness to save declined slightly, though it remained at a high level, the survey showed. Meanwhile, consumers' expectations for the economy dropped to a level close to that recorded in April 2022.

Consumer sentiment had been stabilizing toward the end of 2025, as hopes for a recovery of the German economy grew on the back of a more-than $1 trillion fiscal stimulus from the country's government. Germany's economy grew last year for the first time since 2022.

The war in Iran now threatens that upswing.

"Consumer concerns are growing that the tentative upturn in the German economy could suffer a serious setback, especially if the conflict persists and government measures fail to take effect," the survey's authors said.


Write to Ed Frankl at edward.frankl@wsj.com


(END) Dow Jones Newswires

04-27-26 0214ET