German investor sentiment fell slightly in August on concern about the impact of the rising cost of living on private consumption and a sign that Europe’s largest economy was beginning to fall into recession.
The ZEW Institute for Economic Research said Tuesday that its index of economic sentiment fell to -55.3 from -53.8 in July.
“Continuing high inflation rates and the expected additional costs of heating and energy are reducing the profit outlook for the private consumption sector,” Michael Schroeder, a researcher at the institute, said in a statement.
“In contrast, the outlook for the financial sector is improving due to the assumed additional increase in short-term interest rates,” he added.
The German economy stagnated in the second quarter and is on the brink of contraction due to the war in Ukraine, high energy prices, the Corona pandemic and supply disruptions.
The inflation rate in Germany is 8.5%.
Finance Minister Christian Lindner said last week that the economic situation was deteriorating in Germany and that the outlook was fragile.