Germans purchasing power is growing faster than inflation – GfK survey

Germans purchasing power is growing faster than inflation – GfK survey

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Bruchsal, Germany, 18 December 2007 – According to the findings by a survey done by GfK GeoMarketing,

German consumers are forecast to have disposable incomes totalling EUR 1,542 billion in 2008. This figure includes state benefits like unemployment benefit, child benefit and pensions. This corresponds to an average per capita purchasing power or disposable income of EUR 18,734 per annum, which every German can spend on the necessities of life and consumer goods. The figure is almost 700 euros higher than for 2007 and represents growth of around 3.8%. It means that the growth of the average per capita purchasing power exceeds the maximum rate of 2% inflation forecast by the European Central Bank for 2008.

This means, Germans will have more money to spend on rentals, savings, services and retail consumer goods than this year.

German purchasing power has been continually rising for many years. Although there are no double digit increases, affluence is continuing to grow at a high level. In terms of business, the challenge is to make products and services more attractive in order to release the consumer potential of Germans, who are noted for being avid savers.

According to the survey Bavaria’s inhabitants with an average disposable income of EUR 20,340 per capita are the most affluent members of German society. Seven of the ten districts of Germany with the highest purchasing power are located in Bavaria and in a national purchasing power ranking, 39 Bavarian districts the top 100.

Also Purchasing power is highest above the German average in the districts to the east of Munich, and growth is anticipated to continue in 2008. Another area of high purchasing power is centered in the region around Hamburg. In total, the regional breakdown shows that German purchasing power runs highest along an unbroken line drawn from south to north and slightly west of the center of Germany. Conversely, the per capita value in all districts of Germany’s eastern states remains below the national average, although nowhere does it drop below 25% of the German average.

The GfK purchasing power survey shows that the rural areas around major towns and cities continue to benefit from the long-time trend that higher income groups used to prefer living in suburbs outside the city centers.

The purchasing power survey was first published by GfK as early as 1937. It quantifies disposable income after taxes and social contributions and including state benefits on a per capita and per annum basis. It is calculated in euros and takes the form of an index (German average = 100). The calculations are based on salary and income tax data, and take into account state benefits and forecasts given by financial institutes. The purchasing power survey covers all German urban and rural districts, municipalities and postal code areas, as well as 2.4 million street sections.