”Perceived” inflation significantly higher in Germany

By: Trademagazin editor Date: 2023. 06. 29. 09:22

Consumers in Germany perceive inflation to be three times higher than the actual rate. This has an impact on willingness to buy, as a recent study by Allianz Trade shows.

In May 2023, Germany recorded an inflation rate of 6.1 per cent. However, the inflation perceived by Germans lies at 18 per cent, according to Allianz Trade.

“This is not insignificant, because perceived inflation strongly influences consumers’ actions, for example in their buying behavior. So this discrepancy plays an important role, especially for the economy and companies, as well as for interest rate policy,”

Jasmin Gröschl, senior economist at Allianz Trade said.

There are several reasons for the discrepancy, she said: Customers are paying more attention to price fluctuations for common errands such as food or fuel. If these prices rise above average, people tend to perceive a much higher inflation. Similarly, psychological aspects, demographic and regional differences, and also individual consumer behavior can lead to a distorted perception of price increases.

In neighbouring Austria, the inflation rate was 8.8 per cent higher, while in Switzerland it was significantly lower at 2.2 per cent.

“Key factors in inflation are geographic proximity to Russia, dependence on energy and food imports, government intervention to lower certain prices, and the strength of the respective currency,”

Gröschl said.

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