Germany sees record decline in real earnings due to high inflation

BERLIN, Feb. 7 (Xinhua) -- Real earnings in Germany declined by 4.1 percent in 2022 year-on-year due to rising consumer prices. This was the sharpest drop since the start of the time series in 2008, according to preliminary figures published by the Federal Statistical Office (Destatis) on Tuesday.

The record 7.9 percent annual inflation in Europe's largest economy last year more than offset the 3.4 percent increase in nominal earnings, according to Destatis. Real earnings had already declined in the previous two years due to the COVID-19 pandemic.

As a result, a growing number of Germans are using overdraft facilities to pay their bills. According to the Federation of German Consumer Organizations (VZBV), one in seven consumers overdrew their bank account between September and December last year.

"The increased cost of living is a risk of over-indebtedness for consumers," VZBV Executive Director Ramona Pop warned last week, stressing that overdraft facilities were "far too expensive to make up for financial shortfalls in the medium or long term."

Households with low incomes are particularly affected by high inflation. For them, inflation was as high as 8.8 percent last year, just under one percentage point more than the overall inflation rate, according to a recent study of Germans' spending behavior by the Macroeconomic Policy Institute (IMK).

For high-income single people, on the other hand, inflation was only 6.6 percent. This "social gap" in the severity of inflationary pressure had narrowed to some extent as a result of the latest government relief measures, but was "by no means closed," the institute said. (1 euro = 1.07 U.S. dollar)

Article type: free
User access status:
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In World

U.S. flags arbitrary killings, arrests and torture in Nicaragua
Ukraine says Russia cruise missiles blown up in transit in Crimea
Low birth rates problematic for ageing EU population: Spanish expert
More storm to hit weather-battered U.S. California
U.S. agricultural futures close mixed
Oil prices rebound after prior week's selloff
Former Turkish economy tsar Simsek not interested in active politics
Boeing delivers satellite platform to Viasat
U.S. stocks close higher
Russia says Su-35 scrambled over Baltic as 2 US bombers flew towards border

Others Also Read