According to a study by the Ifo economic institute based on a review of bank accounts, inflation is robbing Germans of additional savings as a result of ongoing price increases.
According to the institute, many households have already lost the savings they had built up during the epidemic era. This has happened at a time when consumer prices are expected to continue to rise quickly, which means that private consumption will no longer be the main driver of the German economy.
The Corona virus pandemic, which was accompanied by severe social restrictions, caused a sharp increase in private household deposits in German banks between the second quarter of 2020 and the first quarter of 2021, according to the report. At the time, Germans had 70 billion euros in their bank accounts, which was 70 billion euros more than was typical.
However, by the end of the first quarter of 2022, these extra savings had all but disappeared, and this pattern repeated in the second quarter at a very consistent rate. Rising household spending in Germany is mostly associated with a high rate of inflation, per the IFO research.
German savings are eaten away by inflation.
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