Inflation has largely exhausted the savings that Germans had accumulated over the past two years of the pandemic, a new study found.
The Ifo Institute in its study found that households had €70 billion ($69.7 billion) more money in their bank accounts between the second quarter of 2020 and the first quarter of 2021, compared to the same period in usual years.
“Inflation eats up surplus savings … The data from the balance sheet statistics of financial institutions shows that these surplus deposits had been almost completely eliminated by the end of the first quarter of 2022,” the institute said.
It was revealed that the depletion in savings remained almost unchanged in the second quarter of 2022 and that German consumers have been increasingly using their savings since the end of last year.
Timo Wollmershauser, head of the Research and Economic Forecast at the institute, said: "High inflation may have been the driving force behind the spending of these household savings."
According to the German Federal Statistics Office (Destatis), inflation in the country, which was 7.6% in June, was at 7.5% in July.
Meanwhile, Germany’s central bank on Monday said that the probability of a recession in the German economy is increasing and inflation may reach 10% in the fall.