The Institute for Macroeconomics and Business Studies (IMK) at the "Hans Böckler" has conducted research showing that the purchasing power of middle-income families in Germany has declined in recent years - despite relief measures taken by the state, such as bonuses paid by many employers to compensate for inflation. Thus, the German government wanted to reduce the consequences of the so-called cold progression - inflation "eats" the salary increase. But a higher salary also means higher taxes, and hence reduced purchasing power, experts note in this regard.
Financial relief, but only for certain groups
What the survey results show: People with low incomes, childless couples and well-earning families have benefited most from the measures taken by the German government. Families with middle incomes, however, report a minus.
In numbers: a family with two children and two working parents, whose gross annual income does not exceed 58,990 euros, had 492 euros less per year, that is, its purchasing power fell by that much. The same applies to single parents with one child and a gross annual income of 43,693 euros – and with them, inflation could not be fully compensated.
According to Zylke Tober of the IMK research team, the reasons for this are clear: middle-income families have not benefited as effectively from the income tax cut, and child benefits have not been increased enough to compensate for growth of inflation. In addition, in recent years the main price drivers have been food and energy, for which lower incomes generally receive greater relief, but not those whose incomes are in the middle segment.
Higher child benefits – is this the solution?
The IMK study talks about a "social imbalance". The researchers are therefore calling for more direct benefits, such as child benefits. In recent years, they have not increased enough to compensate for inflation. In this regard, ARD reminds that from the beginning of next year, child allowances will increase by five euros to 255 euros per month per child. However, this is not enough, IMK experts claim.
The Ministry of Finance does not agree with this. From there they state that from 2023 the child benefit has been increased to 250 euros per month, and in July 2022 the federal government also introduced an extraordinary supplement for children from families affected by poverty.
According to the Bundesbank, inflation will not fall further in the coming months. In addition, wages in the service sector have increased significantly recently. This is another reason why inflation is not expected to fall,
In the next few months, there will be some fluctuations in the inflation values, but in general it will not fall further, says the latest report of the Bundesbank. The reason is the large fluctuations in oil prices over the past year.
In addition, wages in the service sector have recently increased significantly – another reason why a significant drop in inflation is not expected, according to the Central Bank.