The year 2022 has been a financial nightmare for many people. Skyrocketing energy costs and dramatic increases in food prices have forced millions of consumers to tighten their belts and count every penny when shopping. There is no rapid improvement in sight. On the contrary: There are many indications that most people will have a little less money in their wallets in real terms next year – i.e. after deducting the inflation rate – than in 2022.
“2023 will be another bad financial year for most,” said economics expert Torsten Schmidt from the RWI – Leibniz Institute for Economic Research in Essen of the German Press Agency. Real wages are expected to shrink again by 1.7 percent in the coming year due to the high inflation – after a minus of 3.7 percent in 2022. It will only go up again in 2024.
Schmidt is not alone in this assessment. In its annual report 22/23, the German Council of Economic Experts also comes to the conclusion that wage growth in Germany in 2023 will be “significantly below the inflation rate”. The experts expect an inflation rate of 7.4 percent for Germany in the coming year.
That’s foreseeable
In many households, incomes will not rise as quickly as prices. That should apply to many of the 21 million pensioners in Germany. According to the draft of the pension insurance report from November, pensioners in western Germany can expect 3.5 percent more money from July and in eastern Germany the plus should be 4.2 percent. That’s not a little – but probably not enough to make up for the expected price increases.
Nevertheless, the NRW consumer advice center also sees positive developments in the coming year, which will help at least some population groups to cope with the current challenges. This includes, above all, the introduction of the citizens’ allowance for millions of people in need on January 1st, said the board of directors of the consumer advice center, Wolfgang Schuldzinski. In view of the high inflation, the basic security benefits will increase by more than 50 euros in 2023. In the future, single people will receive 502 euros per month, almost 12 percent more than before. The housing benefit is also increasing and should benefit more people in the future.
Significantly more consumers will benefit from the electricity and gas price brake, which is intended to cushion the price explosion in energy costs in the new year. Gas consumers are to be guaranteed a gross price of 12 cents per kilowatt hour for 80 percent of their current consumption. Similarly, 40 cents per kilowatt hour are planned for electricity.
Many commuters should also be able to save EUR 49 per month thanks to the announced introduction of a nationwide public transport ticket (Deutschlandticket).
Others will have to dig deeper into their pockets. According to the consumer advice center in North Rhine-Westphalia, many car insurance policies will become more expensive in the new year. The major hail damage, especially to motor vehicles in June 2021, played a decisive role here, as did the high inflation of the past few months, which has increased the cost of repairs.
For those insured by statutory health insurance, the health insurance contributions – currently an average of 15.9 percent – will be increased by an estimated 0.3 points to an average of 16.2 percent according to the plans of Federal Health Minister Karl Lauterbach (SPD). The assessment limits up to which the income is subject to compulsory health insurance contributions will also increase in 2023 – from 58,050 euros to 59,850 euros per year. This also increases the health insurance contributions for higher earners.
Smoking is also becoming more expensive. Taxes on cigarettes, cigarillos and tobacco are increasing. Packs of 20 cigarettes will cost an average of 18 cents more in future.
