Food and heating costs
Why inflation is hitting middle-income families and couples especially hard
Middle-income families are particularly hard hit by high inflation
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Couples without children and families with a middle income are particularly affected by inflation. According to the Hans Böckler Foundation, the population groups had to dig deep into their pockets in percentage terms in 2021.
Families have not had it easy in the past two years: because of the Corona crisis, the schools have repeatedly closed and the children have had to stay at home. In addition, people also worked from the home office or the parents had to manage the balancing act between work and childcare.
But even with the second major burden in 2021, it is again the middle-income families who are hit the hardest in percentage terms. Like the Hans Böckler Foundation in the Inflation monitor of the Institute for Macroeconomics and Business Cycle Research (IMK) determined that families had to spend around 5.5 percent more for an average shopping basket in December 2021. Inflation was also 5.5 percent for middle-income couples. In family households with two children and low income it was 5.3 percent, in families with higher income 5.4 percent. Inflation was somewhat less drastic among singles with high and middle incomes: they spent 4.7 and 5.0 percent more in December, respectively. “On the other hand, single people with low incomes had the lowest household-specific inflation rate of 4.4 percent,” according to the foundation.
Even looking at the year 2021 as a whole does not change the burdens. “While the consumer price index rose by 3.1 percent on average in Germany, the household-specific rates ranged from 2.6 percent for singles with low incomes to 3.3 percent for families with two children and low or middle incomes,” it says in a statement from the Foundation.
Who is considered middle income?
The experts expect that inflation will weaken over the course of 2022, since a large part of the price increase was caused by corona effects. But the situation remains difficult, especially for households with small and middle incomes, after all they usually only buy the bare essentials and have little or no financial leeway for inflation.
Eight representative household types are considered for the IMK Inflation Monitor: Couple households with two children and low (2000-2600 euros), medium (3600-5000 euros) and higher (more than 5000 euros) monthly net household income. In the case of single households, a distinction is made between low (less than 900 euros), medium (1500-2000 euros), higher (2000-2600 euros) and high (more than 5000 euros) net household income. And for couple households without children with an average household net income, a sum of between 3,600 and 5,000 euros per month is assumed.
Silke Tober, IMK expert, denies that single parents or people with low incomes are hit less hard by the current inflation developments. Rather, inflation is calculated on the basis of product groups that, apart from rising food prices, play no or only a very minor role for these income brackets. In short: if cars or high-end technology become more expensive, this group won’t be affected because they can’t afford them anyway.
The expert sees things differently with the currently very high energy prices. “Especially for people with low incomes, the currently high energy prices are a major burden. This even applies to people on Hartz IV basic security, since the usual heating costs are covered by the state, but not the electricity costs,” says the economist . “A subsidy for low-income earners, especially those with children, is therefore a sensible distribution policy measure in the current situation.”
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