German consumer confidence has fallen to its lowest level since June 2003, a leading survey shows today, as the effects of increased employment and wages were 'demolished' by inflation.
The confidence index compiled by the GfK institute fell to 2.1 points from 3.6 points in its previous survey, with an indicator of economic and income expectations falling particularly sharply.
'The positive momentum generated by the job market and the beneficial wage and salary increases compared with last year are consequently being demolished by inflation,' GfK said.
In June, consumer prices in the biggest European economy rose by 3.3% in June on a 12-month basis, the biggest increase since December 1993.
'Record price increases, triggered primarily by rocketing energy prices, are leaving consumers increasingly fearful of their purchasing power,' GfK said.
Income expectations fell to their lowest level since November 2005, 'in light of growing fears of a recession and the fact that the crisis in the financial markets seems far from over,' it added.
