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German consumers to be hit by further price hikes in supermarkets

German retailers have warned of yet another series of price rises in supermarkets across the country.

Supermarket prices
An elderly woman shops in a supermarket in Bavaria. Photo: picture alliance/dpa | Sven Hoppe

According to the German Retail Association (HDE), consumers should prepare for another wave of price hikes for everyday goods and groceries.

Even before the outbreak of war in Ukraine, prices had risen by about five per cent “across the product range” as a result of increased energy prices, HDE President Josef Sanktjohanser told the Neue Osnabrücker Zeitung on Friday.

With Russia’s invasion hitting economies and the supply chain harder, yet another series of price increases is on the horizon. 

“The second wave of price increases is coming, and it will certainly be in double figures,” Sanktjohanser warned.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

According to the president of the trade association, the first retail chains have already started to raise their prices in Germany – and the rest are likely to follow.

“We will soon be able to see the impact of the war reflected in price labels across all the supermarkets,” said Sanktjohanser.

Recently, popular retail chains such as Aldi, Edeka and Globus announced that they would be forced to raise their prices. 

At Aldi, meat and butter will be “significantly more expensive” from Monday due to price hikes from its suppliers.

“Since the start of the Ukraine war, there have been jumps in purchase prices that we have not experienced before,” a spokesperson for Aldi Nord announced on Friday.  

A fortnight ago, Aldi raised the prices of about 160 items, and a week later 20 more items became more expensive. Other supermarket brands quickly followed suit. 

In February, Germany’s cost of living rose at the highest level since reunification, with everyday goods increasing by an average of 7.3 percent. 

The federal statistics agency Destatis said the jump from January’s figure of 5.1 percent to February’s 7.3 percent reflected the impact of Russia’s invasion of Ukraine, which has sent the price of oil and gas soaring. 

According to a recently published survey by the Ifo Institute, almost all companies in Germany’s food retail sector are planning price increases.

No food shortages on the horizon

Though price increases are a worry for Germany’s hard-hit consumers, industry experts don’t expect there to be a lack of products on the shelves anytime soon. 

According to Joachim Rukwied, president of the farming association, the food supply in Germany is assured for at least another year – though after this the forecasts are less certain.

With rumours of shortages swirling around, however, supermarket owners have been complaining of the sort of panic-buying not seen since the first months of pandemic.

As The Local has been reporting, supermarkets have even started limiting the purchase of cooking oils and flour in particular to prevent a mad rush to stock up on items that customers believe will run out. 

READ ALSO: Why are people in Germany clearing out supermarket shelves?

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MONEY

Why German bank customers could soon pay less for their account

A major German bank is set to scrap fees on large balances - and a number of others look set to follow. Here's why people in Germany may be paying less for their savings or current account in the near future.

Why German bank customers could soon pay less for their account

What’s going on? 

Interest rates have been at rock-bottom levels for years, making it much harder for people to get returns on their savings.

In recent years, many banks have even been levying what’s known as negative interest rates on customers. If interest normally incentivises people to save by helping them to grow their money, negative interest basically does the opposite.

If you have a certain amount of money in the bank, your bank will charge you negative interest via a deposit holding fee, which will usually be a certain percentage of your balance.

With N26, for example, balances of over €50,000 are subject to a 0.5 percent fee each year. For a balance of exactly €50,000, that equates to €250 in bank charges just for keeping your money there. 

Some banks even charge a deposit holding fee for balances as low as €5,000 or €10,000 in a current account. 

On Tuesday, ING Deutschland became the first bank to announce that it would be scrapping negative interest rates for the vast majority of its customers.

From July 1st, new customers of ING will be able to deposit up to €500,000 in their account without being charged for it, while existing customers will automatically have the fee-free amount raised to €500,000 from the current €50,000. 

Now, it seems a number of other German banks are planning similar moves. 

Why is ING Deutschland ending the holding fee?

Not entirely out of the goodness of its own heart – though that doesn’t stop it being good news for customers.

The European Central Bank (ECB) is set to make a decision on interest rates in the bloc this July, and most people expect that the bank is poised to increase interest rates from minus 0.5 percent to zero. 

Since banks have basically been passing on the ECB’s fees to their own customers, a hike in the ECB’s interest rate would spell the end of most negative interest-rate accounts in any case. But ING Deutschland said it wanted to pass on the positive interest rate trend to its customers even earlier.

READ ALSO: EXPLAINED: How to save money on your taxes in Germany

“With the increase in the fee-free allowance for credit balances on the current and extra accounts, the deposit fee is no longer applicable for 99.9 percent of our customers,” said Nick Jue, chief executive officer of ING in Germany. “We were one of the last banks to introduce a deposit holding fee and one of the first to virtually abolish it.”

He added that the bank had already kept its promise to abolish the holding fee for almost all customers before the European Central Bank made its decision.

Does this have anything to do with that court decision on bank charges?

That’s definitely a factor. According to a decision in Germany’s Federal Supreme Court last year, credit institutions have to obtain the consent of their customers when making changes to their fees and conditions.

That means that financial institutions have to ask for consent to current fees retrospectively if they don’t want hoards of people trying to claim their money back.

If a customer doesn’t consent to the fees, the bank will usually close that customer’s account.

Man signs a contract

A man in a suit fills in an official form. Photo: picture alliance/dpa/Pixabay | hnw-Gruppe

According to ING Deutschland, the scrapping of negative interest rates on balances up to €500,000 may help to sway those customers who have not yet agreed to the latest terms and conditions – including the deposit holding fee.

Anyone who agrees to the Ts&Cs will automatically be given the higher allowance as of July 1st.

“ING Deutschland expects that the increase in the allowances will convince in particular those customers who have not yet agreed to the General Terms and Conditions including the holding fee, and that the bank will thus terminate fewer customers than last planned,” ING said in a press release. 

READ ALSO:

What other banks are planning to do this?

According to reports in Bild and Bialo, the other banks planning on ending negative interest rates (or raising the threshold for fee-free balances like ING Deutschland has done) include:

  • Deutsche Bank
  • Commerzbank
  • Deutsche Apotheker- und Ärztebank (Apobank)
  • Dortmunder Volksbank
  • Hamburger Sparkasse (Haspa
  • Frankfurter Sparkasse
  • Frankfurter Volksbank
  • Mittelbrandenburgische Sparkasse
  • Nassauische Sparkasse (Naspa)
  • Ostsächsische Sparkasse Dresden
  • Sparda-Bank München
  • Sparda-Bank Südwest
  • Sparda-Bank West
  • Sparkasse Hannover
  • Sparkasse Pforzheim Calw
  • Volksbank Stuttgart

What does this mean for my savings?

There’s good news and bad news.

The good news is that, from July, you’ll no longer have to pay exorbitant charges just to store your money in a safe place – and you won’t be penalised for saving more. The bad news, on the other hand, is that low interest rates aren’t going away anytime soon.

So while you won’t be losing money hand over fist, you won’t be earning much of a return on your savings either.

Banks in Frankfurt

Skyscrapers in the financial district of Frankfurt am Main. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

“If the interest rate environment continues to develop positively, we will also let our customers participate in this development,” said ING Deutschland’s Nick Jue. “However, the low-interest phase will continue for the time being and broadly diversified investments will remain important.”

Getting a securities account where your money is invested is one way to try and grow your savings, as is investing in property.

Of course, people with mortgages and other loans benefit from the low interest rates – which could be why the German property market is currently booming. 

READ ALSO: Five ways Germany’s soaring inflation could affect your life

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