German business sentiment slumped in June as headwinds from looming natural gas shortages and soaring prices crimped confidence, prompting analysts to boost the odds that Europe’s biggest economy will be rocked by stagflation.
The closely-watched Ifo business climate index, released on June 24, showed a slump in its current conditions gauge and sharp drop in its forward-looking measure, prompting Ifo president Clemens Fuest to remark that “sentiment in German business has clouded over.”
The current conditions component of the index fell to 92.3 points in June from 93.0 points in May. The forward-looking gauge saw a deeper drop to 85.8 in June from 86.9 in May, with Fuest saying that German business sentiment regarding the future had turned “markedly more pessimistic.”…