Consumers in Germany perceive inflation to be higher than officially stated. According to a study, they pay particular attention to the prices of frequently purchased goods. The gap to real inflation is particularly large.
The inflation perceived by consumers and the officially recorded rate differ particularly strongly in Germany. The perceived inflation rate in May was 18 percent, almost three times as high as that actually determined (6.1 percent), said the credit insurer Allianz Trade in Hamburg. “That is not insignificant, because the perceived inflation has a strong influence on consumer behavior, for example in purchasing behavior,” said Jasmin Gröschl, Senior Economist at Allianz Trade. This discrepancy therefore plays an important role for the economy and companies as well as for interest rate policy.
There are various reasons why perceived inflation differs from official inflation. For example, consumers paid more attention to price changes for frequent purchases such as food and beverages, fuel or other errands in the supermarket. “If these prices rise above average there, people tend to feel that inflation is much higher.” But psychological aspects, demographic and regional differences and individual consumer behavior could also lead to consumers assessing the price increase differently than the official measurement. “This creates a distorted picture and a strong discrepancy between perceived and actual inflation.”
In Germany, food in particular has been one of the price drivers for months: According to the Federal Statistical Office, food prices rose by 14.9 percent in May within a year.
Inflation: Large differences in Europe
According to the study, there are not only major differences in perceived inflation, but also in official inflation. In May, the range was from 2.8 percent in Greece to 13 percent in Poland and 21.5 percent in Hungary. For comparison: Inflation in the euro zone was 6.1 percent and the perceived rate was almost 17 percent, according to Allianz Trade.
“Key factors in inflation are geographical proximity to Russia, dependence on energy and food imports, state intervention to lower individual prices and the strength of the respective currency,” explained Gröschl. In Germany, all factors played a role. The high energy dependency on Russia made the bill for this much more expensive – the federal government counteracted this with electricity and gas price brakes. In addition, a weak euro against the dollar has increased inflation in the euro zone, since commodities such as oil and gas, which are traded in dollars, have become more expensive.
Inflation in the non-EU country Switzerland was exceptionally low at 2.2 percent in May. Among other things, it benefits from the strong Swiss franc, which dampens inflation through import prices.
Source: Stern
