Survey suggests significantly exaggerated price hike claim - The research indicates that the perceived price hikes are significantly exaggerated.
In recent years, consumers in Germany have noticed a significant increase in the cost of essential items like food, heating energy, and gasoline. However, the actual inflation rate, as reported by the Federal Statistical Office, hasn't followed this perceived trend as closely. A study conducted by the employer-affiliated Institute of the German Economy (IW) sheds light on this misinterpretation of price increases.
The survey, involving 3,267 participants aged 18 and above, found that two-thirds of consumers believed food prices had skyrocketed over the past year. Despite this, the average inflation rate in this category was only 1.9% in 2024, as per the Federal Statistical Office. Interestingly, consumers thought the overall inflation rate from the previous year was an eye-watering 15.3%, while the actual figure was just 2.2%.
Matthias Diermeier, the study author, pointed out that prices had indeed risen sharply in 2023 but leveled off in 2024. However, consumers' perception of continued price increases in 2024 seemed to be significantly off the mark. "Many people do not realize that inflation has actually decreased," he said.
The study also highlighted a trend among supporters of fringe parties, such as AfD and BSW, who tend to view inflation more negatively and overestimate price increases the most. Diermeier suggested that mistrust towards official statistics might be a factor in this overestimation. Inflation could potentially play a significant role in mobilizing voters on the extremes during the federal election.
Since 2020, consumer prices in Germany have ascended by a staggering 19.3%. Heating energy (a 50.3% increase), fuel like diesel and gasoline (a 41% increase), and food (a 32.8% increase) have all become costlier.
While the reasons behind this misperception of inflation in food prices are not explicitly outlined in the study, historical context, subjective perception, quality improvements, gender role division, and regional differences are known to influence how people perceive inflation. Understanding these factors can help bridge the gap between perceived and actual inflation rates.
The study revealed that although the average inflation rate for food was only 1.9% in 2024, two-thirds of consumers believed food prices had significantly increased. This misperception of price increases, as mentioned by Matthias Diermeier, the study author, could potentially lead to a distorted view of the overall inflation rate.
Despite the significant price increase of essential items like food, heating energy, and gasoline in recent years, consumers' perception of a continuing price increase in 2024 seems to be overstated, according to the IW study.