Inflation puts pressure on buying mood - financial experts expect changes soon

Inflation is still depressing people's willingness to buy in Germany, and a large proportion of them are not buying because of it. But that could soon change.

More people consume more, here on a shopping street in DüsseldorfPhoto: Michael Gstettenbauer/imago

High food prices dampen consumer sentiment

According to a report by taz.de, consumer expert Rolf Bürkl from the Nuremberg Institute for Market Decisions (NIM) warns that the high prices for food are weakening the purchasing power of private households in Germany and that private consumption will not support the economy this year. This is also evidenced by the GfK consumer climate, which shows a deterioration in purchasing sentiment. In addition, inflation has a negative impact on the financial situation of people in Germany, as the wealth barometer of the German Savings Banks and Giro Association shows.

Impact on the market and the financial industry

Inflation and the associated effects on the purchasing power of the population also have an impact on the market and the financial sector. In 2022/23, the economy fell into recession due to consumer restraint among private households, which reduced their spending due to high inflation. This led to a decline in the economy and affected various industries such as food, clothing and home furnishings.

Economic upswing due to increasing purchasing power

According to the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation, inflation is decreasing and employees are benefiting from high wage agreements. This will result in purchasing power increasing and private households will consume more again in the coming year. The experts assume that private consumer spending will increase by 1.6 percent next year and thus contribute to the revival of the German economy.

Forecasts for the future

Despite the current challenges in the construction industry and the export economy, the IMK predicts that gross domestic product will increase by 0.7 percent in 2024. This shows that the German economy is slowly recovering from the effects of the current crises. Another positive effect on consumption in society as a whole is immigration, as more people also consume more.