Inflation hits the poor harder
One in three has no money for spontaneous expenses
10/05/2022 1:37 p.m
Rising energy prices and food costs present many people in Germany with major challenges. But last year, many people had no reserves, as statistics show.
For almost a third of the people in Germany, unexpectedly large expenses exceed their own financial resources. According to the Federal Statistical Office, 31.9 percent of the population in this country was unable to spontaneously raise 1150 euros or more from the available budget last year. According to calculations by the Wiesbaden statisticians, this group was larger in Germany than in France (27.6 percent) and the Netherlands (15.1 percent). According to the authority on Wednesday, more than 40 percent of the population in Romania, Croatia, Greece, Cyprus and Latvia did not have sufficient financial reserves for unplanned major expenses.
According to the information, two fifths of the people in Germany had to make do with a net income of less than 22,000 euros in 2021. A fifth of the population had a so-called net equivalent income of less than 16,300 euros per year. The equivalent income is a per capita income adjusted for savings effects in multi-person households, as the Federal Office explained. On the other hand, two fifths (40 percent) of the population had an income of 28,400 euros and more.
According to Bettina Kohlrausch, scientific director of the Economic and Social Sciences Institute (WSI) of the Hans Böckler Foundation, which is close to the trade union, workers with lower incomes have lost income more often than average both during the Corona crisis and in the past few months. “And above all families with low incomes currently have to bear significantly higher household-specific inflation rates than wealthy households,” explained Kohlrausch.
Biggest price drivers: energy and food
According to the first official calculations, consumer prices in Germany in September of the current year were 10.0 percent above the level of the same month last year. Inflation in Germany thus jumped to its highest level since the early 1950s. Energy and food have been the biggest price drivers for months. According to provisional calculations by the Federal Statistical Office, in September 2022 energy cost 43.9 percent more than a year earlier, and food prices rose by 18.7 percent. According to the expectations of the IFO Institute, prices in Germany will continue to rise almost across the board in the coming months. “There is still a lot in the price pipeline, especially for gas and electricity,” predicted the head of economic activity at the Munich Institute, Timo Wollmershäuser.
According to the latest IFO survey, all companies in the food trade want to raise prices. More than 92 percent of drugstores are planning price increases, more than 87 percent of restaurants and a good 62 percent of hotels. The IFO Institute surveys several thousand companies every month. The federal government is trying to relieve people with various measures. The traffic light coalition wants to spend billions on price brakes for electricity and gas. “It remains to be seen whether the agreed burden packages are sufficient to comprehensively relieve people of financial worries and burdens,” says WSI researcher Kohlrausch. “That would be doubly important, for those affected and for society as a whole.”
According to the Federal Statistical Office, the 40 percent of the population with the lowest incomes are more often than average people from single-parent households. Almost two thirds (64.6 percent) of them had a net equivalent income of less than 22,000 euros per year in 2021, and a good third (33.2 percent) had less than 16,300 euros. There are also many adults living alone in the lowest income groups: more than half (53.2 percent) of this group earns less than 22,000 euros a year, almost a third (32.2 percent) of those living alone have an income of less than 16,300 euros. According to data from the Wiesbaden authorities, about half (50.1 percent) of the retired people had a net income of less than 22,000 euros in 2021, and almost a quarter (24.6 percent) had less than 16,300 euros at their disposal.