Purchasing power of Germans in 2024: Analysis of the GfK study and regional differences

Purchasing power of Germans in 2024: Analysis of the GfK study and regional differences

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p class="id-Article-content-item id-Article-content-item-summary">A new study by GfK has calculated how high the per capita purchasing power of Germans is. Four federal states are increasing the average extremely.

The purchasing power of Germans will increase to 27,848 euros per capita in 2024. This is what it says in a study by the market research company GfK, which was published today. In purely mathematical terms, this corresponds to an increase of 2.8 percent or 767 euros more per capita compared to the previous year. On average, Germans have an average of 27,848 euros available per capita for consumer spending, housing, leisure or saving in the current year.

What is meant by purchasing power is a question of definition. The GfK calculates the nominal disposable net income, which includes state transfer payments such as pensions, unemployment benefits and child benefits. Nothing will be deducted from this. Therefore, the development of prices in 2023 has a significant influence on what actually remains of these numbers in the end. The Council of Experts for the Assessment of Overall Economic Development, the so-called economists, expect inflation to average 2.6 percent in 2024.

Purchasing power of Germans: Bavaria, Hamburg and Baden-Württemberg at the top

The GfK figures show that there are major regional differences. But drawing conclusions from this is not that easy. “A pensioner in Munich can easily improve his purchasing power by moving to eastern Germany,” explains Timm Bönke, economic expert at the German Institute for Economic Research (DIW). "The example shows that purchasing power alone doesn't say much about how much money someone has available. You always have to know what expenses you have." Nevertheless, the expert comes to the conclusion that “the GfK data accurately reflects the regions in which people are wealthier.”

A look at the regional distribution of purchasing power in Germany shows that Bavaria – as in previous years – takes first place. Eight of the ten “richest” urban and rural districts are in Bavaria. In the entire state, residents have 30,130 euros per capita at their disposal. This puts Bavaria more than eight percent above the national average. In second place among the federal states is Baden-Württemberg with a per capita purchasing power of 29,675 euros, followed by Hamburg (29,657 euros). Hesse is in fourth place with a per capita purchasing power of 28,613 euros.

East with the lowest purchasing power

The top quartet are the only federal states that are actually above the national average. In the rest of the country, at least the remaining 75 percent of the federal states, residents have less than average available. The last three places are occupied by Saxony-Anhalt (24,939 euros), Mecklenburg-Western Pomerania (24,858 euros) and Bremen (24,702 euros).

But here too, caution is advised. “The fact that purchasing power is high in Bavaria, the Frankfurt area and Baden-Württemberg is in the nature of things,” explains DIW economist Bönke. “That’s exactly where the cost of living is high, which is why residents have to bear significantly higher fixed costs and inevitably have to have high purchasing power.” Rents are a key factor in the cost of living. "But all local services such as going to the hairdresser are more expensive because the shops have to pay higher rents. The same euro is worth less in Munich than elsewhere," says Bönke.

Wealthy people save, poorer people consume

Another important detail is calculating the average. There are two methods for this: the median and the arithmetic mean. With the median, all numbers are placed next to each other and the middle is looked at. The GfK calculates with the arithmetic mean. All numbers are added together and divided by the number of numbers. "This is not optimal for looking at income because wages vary greatly. Or to put it another way: the numbers given here convey an overly positive picture because a few high incomes can raise the average quite a bit. That's why the median is actually more meaningful."

You have to keep in mind that more money in your pocket doesn't necessarily mean that more money will be spent. "We know from studies that poorer people spend additional money. For wealthier people, the savings rate also increases as their income increases," says Bönke.

According to a report by www.merkur.de,