There is more for your salary again: Real wages are rising

When the war in Ukraine broke out, energy prices in particular shot up and inflation rose sharply. For a long time, employees' wages did not keep up. Anyone who went to the supermarket noticed this very quickly: suddenly you could buy significantly less for 50 euros. But things are slowly changing. Purchasing power is rising again and employees' real wages are increasing in the second quarter.

The reason is that on average, wages across all occupational groups are 5.4 percent higher than in the same quarter last year. At the same time, consumer prices are only increasing by 2.3 percent, reports the Federal Statistical Office. The difference is the increase in purchasing power, meaning that real wages are 3.1 percent higher in the second quarter than in the same period last year. This was the fifth increase in a row.

Energy prices fall, fuel cheaper

The price increase has recently slowed down significantly. “Energy in particular is much cheaper for consumers than it was a year ago,” says Timo Wollmershäuser, head of economics at the Ifo Institute in Munich. Fuel prices have reached new annual lows in recent days, reports the ADAC. Inflation fell to 1.9 percent in August. “Overall, the inflation rate is likely to remain below the two percent mark that the European Central Bank is aiming for in the coming months,” says Wollmershäuser with hope.

According to the Federal Statistical Office, German income increases were recorded by employees in the energy supply sector (+7.6 percent), in the transport and storage sector (+6.8 percent) and in the health and social services sector (+6.7 percent). The inflation compensation premium, which employers can pay to their employees until the end of 2024 and which amounts to a maximum of 3,000 euros, also contributes to the positive development.

Is the mood for consumption returning?

The question now is whether the increasing purchasing power will also lead to a reuse of consumer spending. So far, people have tended to hold on to their money.