Munich, Aug. 23, (dpa/GNA) - Inflation has wiped away the savings accumulated by Germans during the pandemic, the Munich-based Ifo Institute said on Tuesday.
Private households in Germany saved around €70 billion ($69.5 billion) more between April 2020 and March 2021 than in an average year, Ifo economic research head Timo Wollmershäuser said.
However, as bank balance sheets show, consumers have increasingly drawn on these savings since the end of last year. Accordingly, the surplus deposits were “almost completely eliminated by the end of the first quarter of 2022,” Wollmershäuser said.
“In the second quarter, this development continued at an almost unchanged pace,” he said, adding that inflation is likely to have been a major driver of this.
Consumer prices are continuing to rise strongly, meaning that “private consumption will unfortunately fail to act as an economic engine in Germany over the rest of the year,” the economist said.
While consumption still expanded strongly in the first months of the year despite high inflation, “since the middle of the year, many leading indicators have been showing a clear dampening effect,” he concluded.
GNA