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German consumer morale heads for historic low in May - GfK

    BERLIN, April 27 (Reuters) - German consumer morale is
projected to plunge to a historic low in May as the war in
Ukraine leads to soaring costs for households and dashes hopes
of a post-pandemic recovery, a survey showed on Wednesday.
    The GfK institute said its consumer sentiment index https://tmsnrt.rs/3kcWW3c,
 based on a survey of around 2,000 Germans, dropped to -26.5
points heading into May from a revised -15.7 points a month
earlier. That marked a drop below the previous record low set in
May 2020 during Germany's first COVID-19 lockdown.
    Analysts polled by Reuters had on average expected the index
to drop to -16.0.
    "The war in Ukraine and rates of high inflation have dealt a
severe blow to consumer sentiment. This means that hopes of a
recovery from the easing of pandemic-related restrictions have
finally been dashed," GfK consumer expert Rolf Buerkl said in a
statement.
    Russia's invasion of Ukraine on Feb. 24 has led to an
explosion in energy prices and far-reaching sanctions on Moscow,
both of which have diminished consumers' spending power, the GfK
said.
    "There will only be a sustainable trend shift in consumer
sentiment if there are successful peace negotiations on the war
in Ukraine," Buerkl said.
    The survey was conducted between March 31 and April 11.
    The GfK report came just hours before the German economy
ministry slashed its economic growth forecast for 2022 to 2.2%
from its late January prediction of 3.6%, with inflation seen
at 6.1% this year.

                                MAY 2022  APR 2022  MAY 2021
 Consumer climate               -26.5     -15.7     -8.6
 Consumer climate components    APR 2022  MAR 2022  APR 2021
 - willingness to buy           -10.6     -2.1      17.3
 - income expectations          -31.3     -22.1     9.3
 - business cycle expectations  -16.4     -8.9      7.3
    * The consumer climate indicator forecasts the development
of real private consumption in the following month.
    * An indicator reading above zero signals year-on-year
growth in private consumption. A value below zero indicates a
drop compared with the same period a year ago.
    * According to GfK, a one-point change in the indicator
corresponds to a year-on-year change of 0.1% in private
consumption.
    * The "willingness to buy" indicator represents the balance
between positive and negative responses to the question: "Do you
think now is a good time to buy major items?"
    * The income expectations sub-index reflects expectations
about household finances in the coming 12 months.
    * The additional business cycle expectations index reflects
the participants' assessment of the general economic situation
in the next 12 months.


 (Reporting by Rachel More
Editing by Paul Carrel and Tomasz Janowski)

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