German consumer confidence slumps as energy costs bite

German consumer confidence took a sharp turn for the worse in September, as skyrocketing energy costs dampened household income expectations, according to a survey released on Friday. The consumer sentiment index, compiled by the Nuremberg Institute for Market Decisions and the GfK market research firm, plunged to -30.6 points for October, a full 5.8 points below the revised -26.8 in September, failing to meet the -27.4 average forecast from analysts.

Most households anticipate that soaring energy prices will erode their purchasing power, stated Rolf Buerkl, head of consumer climate at NIM. The income expectations sub-index plummeted 16.7 points to -15.0, its lowest point since April 2026, just prior to the rollout of a fuel discount. Consequently, consumers are increasingly doubtful about their income prospects over the next year.

Meanwhile, households' inclination to save surged 6 points to 21.5, the highest level since the 2008 financial crisis, as people reacted to the increased energy expenses. The survey noted that this rise was particularly noticeable among wealthier households. The willingness to purchase, however, dipped 1 point to -10.8, slightly above its level a year ago of -11.6, and has remained near that figure for over three years.

Economic expectations, in contrast, rose half a point to -3.4, marking the fifth consecutive increase, as Germany's economy outperformed forecasts in the first half of 2026. The survey was conducted from September 3-14, with around 2,000 consumer interviews. The consumer sentiment index aims to predict consumer behavior in the upcoming month; a one-point shift in the indicator correlates to a year-on-year change of 0.1% in private consumption.

A reading above zero signals year-on-year growth in private consumption, while a value below zero indicates a decrease.