Mathematically, the Germans parked an additional 70 billion euros in their accounts at the height of the corona pandemic. The reason was the extensive standstill of public life. But the money is largely lost thanks to inflation. This has consequences for the economy as a whole.
According to the IFO Institute, inflation is eating up the additional savings that Germans have accumulated during the pandemic. "The savings cushion from the Corona period has now melted away in many households," said economic chief Timo Wollmershäuser on the current analysis of the bank balance sheets. At the same time, consumer prices are likely to continue to rise sharply. "As a result, private consumption as the driving force behind Germany's economy will unfortunately fail in the further course of the year."
Deposits from private households at banks in Germany grew strongly between the second quarter of 2020 and the first quarter of 2021. The reason: due to the pandemic, travel, visits to restaurants and other leisure activities were not possible or only possible to a limited extent. As a result, a lot of money landed on the high edge.
“If you take the average propensity to save in the five years before the outbreak of the corona crisis as a basis, a good 70 billion euros more were parked in bank accounts than usual during this time,” said Wollmershäuser. But these so-called excess deposits were almost completely eliminated by the end of the first quarter of 2022. And in the spring, this development continued at an almost unchanged pace. "The high inflation is likely to have driven this 'dissaving' of the households significantly," said IFO economic chief Wollmershäuser.
German consumers are currently suffering from the highest inflation in decades because energy became significantly more expensive after the Russian invasion of Ukraine. In July, consumer prices were 7.5 percent higher than a year earlier, after the inflation rate had reached 7.9 percent in May, the highest level since the winter of 1973/1974. The fuel discount and nine-euro ticket are currently driving down inflation for consumers, but this state aid will expire at the end of the month. Experts are therefore anticipating higher inflation rates of around nine percent in the autumn.
