Despite nominal wages rising significantly, German consumers’ purchasing power has still taken a real hit due to high inflation, with real wages in Germany falling over the first quarter of the year.

German consumers lose their purchasing power

Employees in Germany have experienced a significant drop in real wages over the first quarter of 2022, announced the Federal Statistical Office on Monday. This is despite rapidly rising wages, which increased by 4 percent over the first three months of the year. However, over the same period, consumer prices increased by 5,8 percent, meaning that real, price-adjusted earnings in Germany dropped by 1,8 percent over the first quarter.

People working in education, agriculture, fishing, public administration, defence and social security have all enjoyed significant wage increases over the past quarter. They particularly benefited from coronavirus bonuses, which were received by both public employees in the federal states, as well as local and state civil servants. The manufacturing and construction industry also experienced above-average wage growth, primarily due to special payments.

Below average wage growth was recorded in the industries that supply energy, the financial and insurance sectors, as well as in water supply and disposal.

Germans increasingly concerned by rising cost of living

Real wages have continued to fall over the past few years, since the outbreak of the coronavirus pandemic. Last year, rising consumer prices meant real wages fell by 0,1 percent, which followed a fall of 1,1 percent in 2020.

Many Germans are therefore understandably concerned about rising prices, as a recent survey commissioned by credit agency Schufa showed. According to the survey, 38 percent of people are finding it harder to pay for necessary goods, a 10 percent increase from just four months ago. 14 percent of respondents said that they would probably have to take out a loan to maintain their standard of living, while 71 percent indicated their concern that high inflation will damage the prosperity of Germany.

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