Even years after the inflationary shocks caused by the COVID-19 pandemic and the Russian invasion of Ukraine, the majority of citizens feel they have less purchasing power now than before. This is according to a new study released this week by the Düsseldorf Institute for Macroeconomics and Economic Research (IMK), which was reported on by the “Süddeutsche Zeitung”.
The survey revealed that 59 percent of citizens claim their purchasing power has decreased, while only eleven percent hold the opposite view. The researchers note that these results, derived from a poll conducted before the outbreak of the Iran-Iraq War, are particularly noteworthy from a scientific standpoint. This is because, through salary increases, higher minimum wages, increased pensions, and significantly slowing inflation, the economic losses attributable to inflation have long since been recovered on a total economic average. The IMK study highlights a “significant discrepancy between perceived and measured development of disposable real incomes.”
Economists suggest that the primary reason for this gap is the substantial price increase of daily essential goods and services since 2020. This includes oil and gas for home heating, food, drinks, tobacco products, and restaurant visits. According to the Federal Statistical Office, prices in these categories have risen by between 33 and 47 percent. However, they caution that this generalized dissatisfaction masks the fact that the costs of many other, less daily items-such as clothing, footwear, housing maintenance, and leisure/culture-have not risen nearly as much. The researchers conclude that it is consistent for “many people to assess their economic situation more negatively than the actual development of disposable real incomes suggests.”
The study further indicates that this widespread uncertainty has serious economic and political ramifications. Because many people feel they cannot afford as much as they used to, they are restricting both their current and future consumption, which in turn weighs down the overall economy. Political sentiment is also turning increasingly negative; nearly 80 percent of those surveyed who feel they must live on less money than previously were dissatisfied with the performance of the coalition government (CDU, CSU, and SPD). Furthermore, 35 percent stated that they have completely lost faith in the government.
