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The European Union’s monthly survey of Eurozone consumers’ economic outlook slipped 0.3 percent this month to -8.8, the gloomiest view since March 2021.
The outlook across Europe as a whole sagged another 0.2 percent to -10.2.
Analysts had expected consumer confidence to rise slightly.
Residents were worried about the region’s record 5.1-percent inflation rate in January, the Financial Times said.
Their outlook may improve now that Denmark, Norway, and Sweden have lifted virtually all COVID-related restrictions, Germany plans to do so imminently, and Austria has canceled its lockdown for unvaccinated persons, the FT noted.
Europe’s December consumer spending was 3 percent below November’s, but Google mobility data shows traffic returning to shops and entertainment venues across the region and restaurant reservations are increasing in Germany.
“The relaxation of restrictions will allow service spending to spring back,” Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said in an FT interview.
She predicted household spending will stall in this quarter but gather momentum in the second.
TREND FORECAST: The survey was taken before international tensions over Ukraine came to a boil. European consumers’ confidence probably has fallen notably lower now and is likely to remain there until the Ukraine conflict stabilizes.