Research shows how much more you have to work for your food
A study by the German Economic Institute (IW) has now shown how much longer you have to work for your weekly shop, for example, and compared the current crisis with the oil price crisis of 1970. The additional costs are particularly high compared to food. In 2019, for example, a consumer still had to work six minutes for half a pound of butter; in October 2022 it was eight minutes. According to the IW, this corresponds to an increase of one third. A quarter more working time had to be spent on ten eggs than in 2019, and 12 percent more on bread. Likewise for a steak, 36 minutes are needed here in 2022, in 2019 it was 30 minutes.
Energy prices are also a problem for many people, which is also reflected in the IW study. In 2022, a full tank of petrol (60 liters) required almost a full hour more work than was the case in 2019, reports the IW.
Purchasing power during the 1970 oil crisis
Currently, as of November, we have inflation of ten percent, but energy prices have risen by up to 38.4 percent and those for food by 21 percent compared to the same month last year. However, this is not the first time that there has been high inflation in Germany. In the 1970s, inflation was 7.1 percent and oil prices were about the same as they are today. Nevertheless, this was hardly noticeable in those years: The IW examined 31 products to see how expensive they were between 1970 and 1974. The result: Only one of the 31 products examined required more work – and that was cod. For butter, the working time even fell from 20 minutes in 1970 to 14 minutes in 1974, and in 1974 a liter of petrol was still available for the same working time as in 1970, namely six minutes.
Solution proposals of the IW
The comparison has shown that the current crisis is a greater burden for many people than the oil crisis was, because this time the loss of purchasing power is clearly noticeable. Wage increases are not a solution for the IW, because this would only trigger a wage-price spiral and fuel inflation. The IW is of the opinion that less “watering can” and more targeted help are necessary. Good examples are the housing benefit reform that will come into force in 2023 and the heating cost subsidies for housing benefit recipients. Likewise, the inflation compensation premium of 3,000 euros can be clearly felt when shopping for the week.
A long-term solution is needed. Another study by the IW shows that only every second person feels able to save. In 2020, 70 percent of Germans were still able to put money aside on a regular basis. Those who earn less than 1,500 euros a month are particularly hard hit. In 2020, every third person was able to save money with such a salary, in 2022 it will only be every fifth person who feels able to do so. But the middle class is also badly affected, i.e. people with an income between 2,000 and 2,500 euros. Only 52 percent of those surveyed can now put money aside here, compared to 80 percent two years ago. Inflation therefore affects the prosperity of Germans in the long term too.
F. Traina / Editor finanzen.net
Image sources: Claudio Divizia / Shutterstock.com