In addition to energy prices, food prices have also risen sharply recently.
(Photo: imago images/Jochen Tack)
Berlin Inflation is back in Germany. After years of hardly anything happening, prices have been rising significantly for months. At 5.3 percent, the inflation rate in December was the highest since 1992. In 2021 as a whole, the inflation rate was 3.1 percent.
In the crisis year 2020, some prices had fallen, so some of the current inflation rates merely represent a normalization. The price increase in December compared to the previous month was only 0.5 percent, which, however, also means clear growth. Certain goods, above all energy sources such as gas and electricity, have also experienced a price rally that goes far beyond normalization.
This also means that there are significant differences as to who is affected by the current inflation and to what extent. The Institute for Macroeconomics and Business Cycle Research (IMK), which is close to the trade unions, has therefore calculated individual inflation rates for certain household types in Germany. The bottom line: Middle-income families and couples are hit the hardest.
The normal inflation rate is recorded for a representative household using a total of 650 types of goods. The IMK calculated the inflation rate for three types of households – couples with two children, couples without children and people living alone – each with different income brackets. For this, the economist Silke Tober compared the respective consumer habits with the rise in the prices of individual product groups.
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The IMK has broken down the price increase rate for a total of eight different household types. This ranges between 4.4 and 5.5 percent. The differences result primarily from the sharp rise in oil prices, which rose by almost 50 percent in December. The chart provides an overview of the individual inflation rates.
Those living alone on low incomes fare best, with a rate of 4.4 percent in December. This is because households affected by poverty can only afford the goods that are currently particularly expensive to a limited extent or not at all.
This applies in particular to fuels and lubricants, whose prices rose by an average of 33.6 percent. This group of goods, which includes fuel for cars, has the lowest weight in a one-person household compared to other households. Fuels and lubricants make up just 1.5 percent of the basket of goods and therefore contributed just 0.4 percentage points to the inflation rate.
Type of heating matters a lot
In contrast, for a middle-income family of four, fuel and lubricants make up 4.5 percent of the shopping basket — the highest proportion among the sampled households. The contribution to inflation is 1.3 percentage points.
The fact that medium rather than high incomes are affected also has to do with energy prices. For example, households have to travel longer distances to work or to the children’s school, or need more energy for heating due to older systems.
The individual inflation rate currently depends in particular on which heating system is used. While the inflation rate for a household with gas heating is 5.2 percent, it is 5.9 percent for oil heating.
In turn, couples with children are more affected than those without children because they spend most of their income on food, on average one fifth. Food prices have also risen sharply recently, increasing by almost six percent.
More: Three reasons why inflation could remain higher than everyone thinks