Prices
Growing concerns about inflation: people in need of livelihood
A customer examines a tomato at a weekly market in Hanover. Because of rising inflation, many people in Germany have to tighten their belts, photo: Moritz Frankenberg/dpa
© dpa-infocom GmbH
Life in Germany has become drastically more expensive. More and more people are concerned about the existence of high inflation. The majority would like more help from the state.
The extremely high consumer prices are becoming a burden for more and more people.
According to a recent YouGov survey commissioned by Postbank, which belongs to the Deutsche Bank Group, about one in seven adults in Germany (15.2 percent) can hardly cover their living expenses. In the comparative survey in January, the proportion of those who said that high inflation threatened their livelihood was still 11 percent.
Almost a quarter (23.6 percent) of those surveyed from households with a monthly net income of less than 2,500 euros now state that they are hardly able to cope with regular expenses due to higher prices. In January, 17 percent of this group said so.
Record high since 1981
In March, the annual inflation rate in Germany had shot up to 7.3 percent. This is the highest rate of inflation in reunified Germany. The last time the old federal states had such a high value was in November 1981. Higher inflation rates reduce the purchasing power of consumers because they can then afford less for one euro.
For months, energy prices have been driving up inflation both in Germany and in the euro area, and the Ukraine war has exacerbated the trend. The German Council of Economic Experts (“Wirtschaftsweise”) expects 6.1 percent inflation in Germany for 2022 as a whole.
“Incomes can hardly keep up with general inflation,” analyzed Postbank chief economist Marco Bargel. “While wages and salaries in Germany rose by 3.6 percent compared to the previous year, the cost of living increased by 7.3 percent. Middle-income households are also affected by the loss of real income.” Two-thirds of the 2,144 respondents indicated that they had significantly or at least slightly reduced their spending due to rising prices.
state should support
According to their own statements, more than every second person (53.4 percent) is very worried about the rising prices for goods and services. Three months ago, the group of those concerned was slightly smaller (44 percent). Economists do not expect inflation rates to ease in the coming months. “In the short term, inflation could continue to rise from high levels because of high energy prices,” Bargel agrees.
Six out of ten respondents (61.3 percent) would therefore like further support from the state. In their opinion, the federal government’s recently launched “relief package” is not enough to mitigate the consequences of inflation. Among other things, the traffic light coalition had decided to reduce the energy tax for three months in order to make petrol and diesel cheaper. In addition, employees receive a one-time energy subsidy of 300 euros on their gross salary and families receive a 100-euro bonus per child on the child allowance. According to estimates by the Federal Ministry of Finance, the total costs for the state will approach the 16 billion euros that the first relief package from February included.
“The extent to which the measures taken are sufficient also depends on the further development of energy prices,” says Bargel. “From today’s perspective, the additional household expenses for more expensive fuel and heating energy will probably not be fully absorbed, especially since individual population groups such as the unemployed only benefit in part.”