The forward-looking indicator, published by pollsters GfK and the Nuremberg Institute for Market Decisions (NIM), fell 3.2 points to minus 28.

German consumers' current purchasing power as well as their tendency to save changed only slightly in the survey, but expectations of their future incomes plunged 12.6 points as pessimism mounts.

The reading in the regular poll of about 2,000 people "indicates a noticeable deterioration in consumer confidence," Rolf Buerkl, head of consumer climate at NIM said.

"Consumers are expecting inflation to take off again and the economic recovery to be held back as a result of higher energy prices."

It was the latest gloomy economic news from Germany; morale among businesses and investors also registered sharp drops in regular surveys released this week.

Oil and natural gas prices have surged since the end of last month, when the United States and Israel began attacking Iran, plunging the Middle East into turmoil.

Though the European Central Bank has said it is unlikely that inflation will reach the heights seen after Russia's full-scale invasion of Ukraine in 2022, Buerkl said hostilities were nevertheless weighing on consumers.

"In a recent NIM study, 60 percent of Germans say they expect prices for oil, gas and petrol to remain high in the long term," he said. "That naturally weighs on consumer confidence."

Germany's economy has barely grown since 2022, hit by subdued global demand and increasingly fierce Chinese competition in key export industries like cars and chemicals.

German Chancellor Friedrich Merz has said reviving the economy is one of his top priorities but economists fear the Iran war is set to stall the rebound once again.

vbw/sr/cw

GFK