With rising prices, German consumers fear the rising energy costs and job cuts. The third consecutive month of price rise has collapsed the confidence of Germans, sending the confidence level at an all time low.

The sentiment index based on survey of 2000 people also fell to 3.3 for January from earlier level of 3.6 in December.

"If this development continues in the coming months, the situation for private consumption will become more difficult in 2010”, Nuremberg-based GFK said in a statement.

Crude oil prices have gone up 85 percent over the past year. The consumer spending will stagnate after a rise of 0.5 percent this year. Income expectations index rose to 15 from 6.2 and a gauge of consumers’ propensity to spend from 26.3 fell to 21.2.

The figures have been shared by the market research firm GfK AG, which stressed, “The expectation of rising prices in the energy sector is currently having a dampening effect. Looming uncertainty as a result of worsening conditions on the labour market is leading to a perceptible increase in the propensity to save. This is also weighing on the consumer climate”.