New data from a consumer confidence survey conducted by EY reveals that Germany is facing a period of economic caution and concern about household well-being. The findings indicate that households are increasingly vigilant about their finances as utility costs rise and living expenses climb across the board. The survey paints a picture of careful budgeting now, with many families prioritizing essential expenses and looking for savings where possible.
The report highlights a shift toward saving driven by perceptions of ongoing price pressures. As electricity bills surge and everyday goods become more expensive, many Germans are adjusting their financial behavior to weather the cost of living spike. This shift toward precautionary saving underscores a broader anxiety about future financial stability and the capacity to absorb shocks from future price movements.
In terms of sentiment, the survey shows that a meaningful portion of respondents view their current financial situation less favorably than at any point in recent memory. A significant share expresses pessimism about what lies ahead, with concerns about income, debt, and overall economic security weighing on judgments about the near and medium-term horizon. This mood reflects a heavy strain on household budgets and the perceived durability of wages in the face of rising costs.
There is also a strong expectation among respondents regarding inflation. Former German Finance Minister Christian Lindner has projected that inflation could hover near seven percent for 2023 before easing in the following year. The outlook emphasizes that any protracted period of high price growth would continue to erode purchasing power and complicate financial planning for families and businesses alike.
From a policy perspective, the goal remains to steer inflation toward a more stable, lower path. The consensus among policymakers is that a return to a two percent inflation rate would restore more predictable conditions for investment, savings, and long-term planning. The balance sought is to foster growth while preserving price stability, a combination viewed as essential for sustaining confidence in the economy and the financial resilience of households. Authorities acknowledge that persistent inflation could undermine confidence in markets and the financial system for an extended period, stressing the importance of credible monetary and fiscal strategies to support household budgets and business investment.