Starting to steal... Germans who can't afford to eat

After the escalation of the Ukraine crisis in February last year, energy and food prices in Germany skyrocketed, pushing inflation rates to a peak of nearly 9%. The recent decrease in energy import costs and other favorable factors have eased inflation in Germany, with the inflation rate falling back to 6.2% in July.

But a German netizen asked on the forum, "Inflation has decreased, but prices are still very high. What's going on?" The response that received the most likes answered, "A decrease in inflation rate does not mean a decrease in prices, but a decrease in price growth rate." Someone then replied with the four initials "dy/dx", implying that inflation rate is like a derivative in mathematics, and the post was filled with a "happy" atmosphere both inside and outside.

But this is more like a helpless self deprecation. The reality is that inflation not only seriously reduces the quality of life of the German people, but also triggers many social problems.

This is a fruit stall filmed on March 2nd in Berlin, Germany, published by Xinhua News Agency

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Comprehensive decline in quality of life

In this round of inflation crisis, the most significant changes in the lives of German residents are the inability to afford food, heating, and driving.

According to data released by the German Federal Bureau of Statistics, energy prices in Germany skyrocketed after the escalation of the Ukraine crisis last year, with natural gas rising from 12.4 euros per kilowatt hour to a maximum of 39.9 euros per kilowatt hour. Since September last year, natural gas prices have significantly fallen and the current trend is stable. On the other hand, food prices have remained high, with an increase of 11% in July. Sugar, grains, vegetables, and seafood have risen by 18.9%, 16.6%, 15.7%, and 14.1% respectively.

When asked about the impact of inflation on his family, college student Jonathan felt very disappointed: "My dad used to run an organic bakery and made bread using traditional techniques. The business was originally good, but due to high energy prices and decreasing profits, he had to close down in the end. Customers were also saving money and were more willing to go to discount supermarkets to buy cheap bread. We also thought of reselling bread to supermarkets, but other bakers were doing the same, so there was no way. Fortunately, Jonathan's father was nearing retirement age, and his mother was a civil servant with a considerable retirement pension.".

Thomas, an office worker, has a more comprehensive understanding of inflation: "Nowadays, I spend almost half more money every time I go to the supermarket to purchase! At the beginning of last year, my monthly natural gas advance payment was 36 euros, which later became 193 euros, almost six times the original amount. Gasoline prices have also increased, and I can't bear to drive to work. My boss doesn't agree to work from home, and I live far away. The bus is inconvenient, so I switched jobs afterwards."

To combat inflation, the European Central Bank has raised interest rates nine times in a row from June last year to August 2 this year, which is undoubtedly a series of blows for those with mortgage loans. When it comes to mortgage loans, a respondent who refused to be named was emotionally agitated. He bought a house with a floating rate mortgage 7 years ago. Later, when the Eurozone interbank lending rate was about to drop to 0, the bank called him and asked him to change it to a fixed interest rate of 1.625%, otherwise the contract would be terminated. "Then I can only sign, but later I found out that fixed interest rates are fixed at the bottom, not the top. It's already over 4 now!"

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Low income individuals struggle to survive

The postal worker Akrim may have been the worst off among the interviewees, but his optimistic attitude impressed a reporter from Global magazine, saying, "The postal worker can only earn the minimum wage, and I couldn't afford lunch for a while. I only took a shower once a week. Last winter, I didn't have the money to turn on the heating, and the house was very cold." Berlin had a long winter last year, and there was a light snowfall in April this year. "But I've adapted, life will always get better," Akrim said with a smile.

Akim's survival status is a microcosm of the low-income population in Germany during inflation: due to the larger proportion of basic living expenses such as food and energy in their consumption, they are more susceptible to inflation shocks. In the past year and a half, reports of elderly people continuing to work after retirement and college students dropping out due to poverty have been common in newspapers.

The German editorial website released a report in July stating that the average retirement pension in Germany is too low to enable elderly people to cope with inflation. The report points out that after paying for pension insurance for at least 45 years, the average monthly pension for elderly people in Germany is only 1543 euros, significantly lower for women and former residents of East Germany. In 2022, the average post tax monthly income of Germans is 2590 euros, and they are still struggling to make ends meet. The difficulty of living for retired elderly people can be imagined.

German left-wing politician Dietmar Balch believes that the report shows that the pension policies of the past 20 years are "shameful" and that Germany is still far from establishing a fair pension system. Balch called for a 10% increase in pension as compensation for all retirees to cope with inflation.

According to a report by German television, the number of elderly people who have reached retirement age but continue to work is increasing year by year. In 2021, there were a total of 1.05 million working people in Germany aged 67 and above. Many elderly people used to work just to make their lives more comfortable, but now more and more people cannot do without this additional income.

What's even more concerning is that the monthly pension for German freelancers is only four to five hundred euros, which is far from enough to cover the current living expenses. According to media reports, due to the continuous rise in prices, some elderly people have run out of savings and are selling their homes that they have lived in for decades to generate cash flow.

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Aggravated social contradictions

The high inflation has gradually become a catalyst for many social problems, and various negative phenomena in German society are increasing. The wealth gap and even intergenerational gap are quietly widening.

The general increase in prices but unchanged wages have caused unbearable suffering for the working class. The German Railway and Transport Union has launched multiple strikes this year, demanding a 12% salary increase or at least a monthly salary increase of 650 euros. Given that labor negotiations have failed multiple times, the union has threatened to hold an indefinite strike if necessary. The German Federation of Trade Unions in the Service Industry has also requested an increase in the minimum wage to 14 euros per hour.

Supermarket theft is becoming increasingly rampant. According to the Munich Courier, the German retail industry suffered a loss of 3.7 billion euros due to theft in 2022, an increase of 15% from 2021, with food theft being particularly severe. The report points out that although the causal relationship between inflation and supermarket theft cannot be determined, there is a strong positive correlation; Food theft is making headlines throughout Europe, and some supermarkets in the UK and France have installed anti-theft bars on dairy and meat products.

German charitable organizations have also been pushed to their limits. There are currently approximately 970 food weekly libraries in Germany, aimed at calling on enthusiastic manufacturers to provide dietary assistance for those who cannot afford to eat. According to the German weekly newspaper Time, in 2022, the number of customers for 40% of food weekly warehouses will increase by 50%; The number of 20% of the customers of the weekly food bank even doubled. More and more of them were originally employees of small and medium-sized enterprises, who were unemployed due to the COVID-19 epidemic, and now can only work for a short time.

The German Economic Research Institute concluded that the COVID-19 and inflation in recent years will widen the gap between rich and poor like the two financial crises from 2008 to 2012. Low income families not only struggle to make ends meet during inflation, but also often do not have much savings, making it easy for them to face the dilemma of family bankruptcy. In addition, experts believe that inflation is beneficial for the government to reduce its debt burden, but it can also induce the government to increase borrowing. In this way, the beneficiaries of the current debt will have their descendants bear the consequences of the debt, resulting in an intergenerational divide.

Although Germany's inflation rate has fallen to 6.2% in July, it is still nearly 1 percentage point higher than the average inflation rate of the entire eurozone, and the rate of decline is relatively slow. In addition, whether in the eurozone or Germany, core inflation rates excluding food and energy remain high and stagnant. It is generally believed that core inflation rates reflect long-term trends better than overall inflation rates. The medium-term goal of the European Central Bank is to bring the inflation rate back to 2%, and currently, it seems that it will take some time to achieve this goal.