Not only income, but also the cost of living determines purchasing power. As a current study by the IW shows, regional income differences are being leveled out by inflation.
Purchasing power and prosperity are relative: they are determined not only by income, but also by the regional cost of living. This is illustrated by current calculations from the German Economic Institute (IW). The researchers adjusted the disposable income per capita in a region for the respective price levels.
The result is a nationwide ranking of purchasing power in the 400 German districts, districts and cities. It shows that the highest purchasing power exists away from the big cities, where inflation is particularly high.
Starnberg in front, Gelsenkirchen behind
At the top of the ranking is the Bavarian district of Starnberg with a price-adjusted disposable income of a good 32,800 euros. This is 34.7 percent above the national average. Although the cost of living there is also significantly higher than the national average at 14.1 percent, the high nominal income advantage secures the region’s top spot.
The IW experts calculated the lowest purchasing power per capita for Gelsenkirchen. At 18,886 euros, it is 22.5 percent below the national average. The costs there, which were 5.1 percent below average, could only compensate for the low income level to a small extent.
After Starnberg, the next highest real incomes are in the Hochtaunuskreis, Baden-Baden and the districts of Miesbach and Munich, where nominal incomes are also far ahead. After Gelsenkirchen, the lowest purchasing power was measured in Offenbach, Duisburg, Herne and Freiburg.
“Scattering is getting smaller”
The ranking shows that differences in the cost of living can offset some of the income differences. “The spread is getting smaller,” says Christoph Schröder from the IW. The differences between East and West also decreased.
In Munich, for example, nominal incomes are in second place nationwide. Because the cost of living there is 25.1 percent above the national average, the Bavarian capital only ranks 24th when adjusted for prices. Other large cities fall even further behind due to the price adjustment.
For its study, the IW combined data from the Federal Statistical Office on nominal income in 2021 with its regional cost of living index. This is based, among other things, on 24 million price data queried in 2022.