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WHAT CHANGES IN GERMANY

How will the cost of living change in Germany in 2022?

The pandemic, rising energy costs and higher food prices are putting a lot of pressure on households. We take a glance at the changes surrounding money and living costs that you can expect in Germany in the coming year.

A person buying groceries at a Berlin supermarket.
A person buying groceries at a Berlin supermarket. What will 2022 mean for your wallet? Photo: picture alliance/dpa/dpa-Zentralbild | Jens Kalaene

The last two years have been a challenge for many people in Germany not only when it comes to health, but also financially. 

With many industries having to close or partially shut, employees having to go on the Kurzarbeit (reduced hours) scheme and the general cost of living going through the roof, it’s been financially difficult for many people. 

But there are a few factors that suggest things will improve in the coming year and that consumers will have more money – or at least not less – in their wallets again.

What’s the outlook?

In a study published in December, Filip Vojtech from the market research company GfK predicted that in 2022 purchasing power will increase significantly for the first time since the beginning of the Covid pandemic.

The market researchers believe that consumers’ purchasing power will increase by 4.3 percent in the coming year. Even after deducting the inflation rate, which is expected to be 2.5 percent according to the forecasts of leading economic research institutes, there would still be some additional purchasing power left over.

However, economic expert Torsten Schmidt from the RWI – the Leibniz Institute for Economic Research in Essen – is not quite so optimistic. He believes that real wages will tend to stagnate in 2022. But even that would be an improvement after the noticeable decline this year.

Wage hikes for people on lower incomes

Some people can look forward to above-average increases in their pay packets. Low-income earners are set to benefit in 2021 as their statutory minimum wage will be raised on January 1st – from the current €9.60 to €9.82 per hour.

On July 1st, it will go up again by another 63 cents to €10.45 per hour. Together, this means an increase of almost 9 percent.

It may go up even more because the coalition – made up of the Social Democrats, Greens and FDP – have agreed to raise the minimum wage to €12 an hour. However, it is still unclear when this will be implemented. 

Trainees in Germany can also look forward to more money. The statutory minimum training allowance in the first year of training will increase from €550 per month to €585.

READ ALSO: What will the new German government mean for your wallet?

Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

Unemployment benefits

From January 2022, all those who are dependent on social assistance and unemployment benefit II (also known as Hartz IV) will receive – a little – more money.

The standard rate for single adults will increase by three euros to €449 per month. The rates for children and young people will also go up.

Kurzarbeit

Kurzarbeit, which allows employers to reduce hours for employees while keeping them on the payroll and has been used throughout the pandemic, has been extended to the end of March 2022.

And there are higher allowances on the cards: 70 percent of people’s monthly net salary is to be paid from the fourth month of receipt – 77 percent if they have a child living in their household. From the seventh month onwards, it will move to 80 percent (and 87 percent for a household with a child) of the monthly net salary.

Kinderzuschlag

The child supplement (Kinderzuschlag), a benefit in addition to child benefit for low-income families, will also be increased, albeit only slightly. It will go up by €4 from €205 to €209 per month per child.

Pensions

The approximately 21 million pensioners in Germany can also expect more money from July. The only question is: how much more? Labour Minister Hubertus Heil (SPD) said at the end of November that he expected “pensions in Germany to increase by 4.4 percent from July 2022.”

That sounds like a lot, but it is less than was forecast last summer – when there was talk of pension increases of 5.2 percent in the west and 5.9 percent in the east.

Electricity costs 

The German government is to lower the levy on electricity consumption from next year to help ease the burden on consumers.

The Renewable Energy Act (EEG) surcharge, used to fund the expansion of solar and wind energy plants, will fall by more than 40 percent to 3.723 cents per kilowatt hour from January 1st.

It is the largest reduction since the green levy was introduced in 2000 to help Germany transition towards cleaner energy sources.

But as The Local reported, it may be that the reduction has little impact on energy bills due to the rising prices of energy. Many people will have already received notice that their electricity costs will be going up from next year. 

How will changes impact your electricity bills? Photo: picture alliance/dpa | Sina Schuldt

Petrol and heating

Some other things are likely to become more expensive in the coming year, like filling your car up with petrol. 

At the beginning of 2022, the CO2 tax will increase from €25 to €30 per tonne of carbon dioxide emissions released by the transport and heating sectors.

The tax was introduced in January 2021 as part of Germany’s strategy to move away from fossil fuels and towards renewable energy.

According to the North Rhine-Westphalia consumer centre, the 2022 tax increase will raise the price of petrol by 1.5 cents per litre, heating oil and diesel by 1.6 cents per litre and natural gas by 0.1 cents per kilowatt hour.

READ ALSO: How households in Germany can tackle rising energy costs

Tobacco tax

Smokers in Germany will also find it more expensive: the tobacco tax for a pack of 20 cigarettes will increase by an average of 10 cents in 2022. The manufacturers are likely to pass on the higher costs to customers.

From July 1st, substances for e-cigarettes will also be subject to tobacco taxation for the first time. A 10-millilitre liquid, which currently costs roughly €5, is to be taxed €1.60 more in 2022, rising to €3.20 by 2026. Tobacco for water pipes will also be taxed at a significantly higher rate in the future.

Posting letters

There’s another slight price increase on the cards: Deutsche Post will raise the cost of posting letters and packages on January 1st. Postcards will cost 70 instead of 60 cents, standard letters 85 instead of 80 cents and other services will also become more expensive.

This is not the first price hike. In the past 10 years, post in Germany has become significantly more expensive. In 2012, sending a standard letter nationally cost only 55 cents.

READ ALSO: German postal service set to hike prices in 2022

Better rights for consumers

This is another change that should help people save money in Germany. Anyone who concludes a contract on the Internet will be able to terminate it more easily in future.

As of July 1st 2022, so-called continuing obligations (Dauerschuldverhältnisse) will need a ‘cancellation button’, which consumers can press to get rid of their contracts without having to do a lot of searching for documents and writing letters.

And from 2022 anyone who buys a product that later turns out to be faulty should have a better chance of getting their money back. Consumers will have their rights strengthened by the warranty period being extended from six months to one year.

What about the prices of everyday goods?

There is a small consolation forecast, according to experts. Overall, the inflation rate is expected to drop noticeably in 2022. In its latest economic report, the RWI estimates there will be a price increase of “only” 2.6 percent for 2022 – after an inflation rate of 3.2 percent this year.

So that means the cost of buying tomatoes, eggs and bread should ease up a bit, or at least we hope so. 

READ ALSO: Why is everything suddenly getting so expensive in Germany?

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For members

WHAT CHANGES IN GERMANY

Everything that changes in Germany in May 2022

From public holidays and Covid rule changes to a tax deadline and shopping, here are the changes to know about in Germany this May.

Everything that changes in Germany in May 2022

May Day

Germany celebrated International Workers’ Day on May 1st. But Tag der Arbeit or Der Erste Mai, as the day is known in German, didn’t result in a day off work for most people because it fell on a Sunday this year. Schade. But no matter, there is another public holiday ahead…

READ ALSO: German politicians call for ‘lost’ public holidays to be replaced

Ascension Day/Father’s Day

Is Thursday May 26th a religious holiday or a day when people in Germany, especially men, get extremely drunk? It’s actually both. Christi Himmelfahrt is about remembering Jesus’ ascent into heaven, but it’s also about day-drinking. 

That’s because it’s Father’s Day (Vatertag), or Men’s Day (Männertag), and the traditional way that Germans like to be thankful to dad is with a ton of alcohol. 

It’s a national public holiday in Germany every year so many people will get the day off work, and supermarkets will be closed. 

READ ALSO: Why Germans get wholly wasted on Ascension Day

Two men carry some beer in Geretsried, Bavaria, for Father's Day 2021.

Two men carry some beer in Geretsried, Bavaria, for Father’s Day 2021. Photo: picture alliance/dpa | Angelika Warmuth

Covid ‘hotspots’ to drop several rules

Most people in Germany saw tough coronavirus restrictions – like 3G or 2G entry to venues – fall away around the start of April. But two states – Hamburg and Mecklenburg-Western Pomerania – declared themselves Covid hotspots and lots of restrictions stayed in place. But that’s set to change. Hamburg’s hotspot regulations are set to end automatically at the end of April, while many of the remaining restrictions in Meck-Pom were lifted on Thursday, April 28th. 

READ ALSO: German Covid hotspot states to lift most restrictions

Pre-sale on €9 monthly travel ticket 

As The Local has been reporting, Germany is getting ready to introduce a massively reduced price ticket for three months over the summer to ease the cost of living and energy crisis. Now some transport providers say they will have a pre-sale on the ticket before it launches on June 1st. So keep an eye out online and in stations over the coming weeks. 

READ ALSO: How will Germany’s €9 monthly travel ticket work?

2020 tax deadline

Those who submit their tax return with the help of a tax advisor always get a little more time to process it. But all things come to an end. The 2020 tax return must be submitted to the tax office by May 31st 2022 at the latest. Anyone who misses the submission deadline will have to pay a late filing fee. This is usually 0.25 per cent of the assessed tax, but at least €25. If this affects you and you haven’t got your tax advisor sorted yet, do it quickly. 

Online banking

Do you have an account with Postbank and use the chipTAN procedure for online banking? Then you are in for a change from May – the method of processing transfers by bank card and reader at home will be dropped. It is to be replaced by the BestSign method, which enables online banking via an app in combination with biometrics or password.

Beer prices likely to go up

We’ve all been dealing with higher costs for the likes of groceries and energy recently. Now beer drinkers will soon have to dig deeper into their pockets. After some breweries already increased their beer prices in April, others will follow suit in May. The Radeberger and Bitburger groups have announced that their beers will become more expensive, according to the Lebensmittelzeitung. The price increase will initially only affect the retailers, but it is likely that they will pass on the additional costs to consumers.

Discounted food to be labelled differently

Before supermarkets remove food going out of date, many offer discounts. Traders have to indicate a new price for these discounted products, with a tag. But from the end of May, a simple notice such as “30 percent cheaper” will be allowed – without indicating the new reduced price. This makes labelling easier for employees and, in the best case, will lead to less food waste.

Vegetables in a German supermarket.

Vegetables in a German supermarket. Photo: picture alliance/dpa | Sven Hoppe

Price checking to become easier

Price comparisons at supermarkets and discounters are to become easier for customers from May 28th. Up until now, the prices on tags at the likes of Aldi, Lidl, Kaufland and co. have been displayed differently. Sometimes the price is indicated per 100 grams, sometimes per kilogram. Due to a change in the law, the latter will soon be the only price that can be displayed. According to the new Price Adjustment Ordinance, it has to be clear at a glance how much a kilogram or a litre of the product costs. Consumers will therefore be able to compare prices between shops more easily without having to do their own conversions.

READ ALSO: How Germany is making it easier for consumers to cancel contracts

More protection and clarity during online shopping

Many people wonder why when they shop online at places like Amazon or other marketplaces, certain products appear at the top and keep reappearing. This should become easier to understand in future. Under news laws coming in from May 2022, providers will have to show more clearly how the sorting criteria offered came about. This includes, for example, showing the number of views and the date the offer was posted, its rating or that of the provider, the number of sales of the product or the “popularity”, commissions or fees.

According to the new amendment, there is also a clear labelling obligation for sellers to indicate whether they are selling privately, reselling or are direct sellers. Online shopping platforms will also have to ensure the authenticity of product reviews and to monitor the ban on fake reviews more closely.

The change also affects comparison portals such as Check24 or Verivox. From May 28th, they will also have to disclose which providers were taken into account in a comparison. Ticket exchanges will also have to provide information about the original price of tickets in order to inform buyers about additionally charged costs and fees.

Violations of the new information requirements can cost companies a lot: according to consumer advice experts, fines of up to €50,000 are possible. Companies with an annual turnover of more than €1.25 million can be fined up to four percent of turnover.

A woman shops online in a Black Friday sal

A woman shops online in a Black Friday sale. Photo: picture alliance/dpa | Mohssen Assanimoghaddam

Checks for doorstep selling

People in Germany are to be better protected against dubious doorstep selling. In the case of contracts concluded during uninvited house calls, payment may no longer be demanded on the day the contract is concluded. Purchases that were made door-to-door should therefore be easier to revoke if the customer decides so. However, this only applies to items or services costing over €50.

More protection against rip-off ‘coffee tours’

According to estimates, every year five million Germans take part in bus trips which end up being sales events. They are known as “Kaffeefahrten” or coffee tours. But stricter regulations will come into force from May 28th. The providers of these events will have to indicate in their advertising in advance where the event will take place, how participants can contact the organiser and what goods will be offered for sale. And when the new law comes into force, certain products may no longer be sold. For instance, it will be strictly forbidden to offer medical products such as weight loss pills, food supplements and financial services such as insurance or building society contracts. Meanwhile, the fine for violations will increase from €1,000 to €10,000.

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