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MONEY

Germans turn to food banks as cost of living crisis hits

German pensioner Gabriele Washah waits in line to fill her trolley with bags of carrots for 50 cents, yoghurts just past their sell-by date and bunches of wilting flowers.  

Germans turn to food banks as cost of living crisis hits
Olga Usik, a Tafel store employee, carries a box full of fruit and vegetables in Baden-Württemberg. Photo: dpa | Felix Kästle

With the cost of living soaring across Europe, the 65-year-old retired shop assistant is one of many Germans turning to food banks to make ends meet.    

“Sometimes I go home from the shop almost crying because I can’t afford it any more,” she told AFP outside the row of stalls in Bernau, near Berlin.    

Nestled in an alleyway behind a big chain supermarket, the food bank sells at greatly reduced prices groceries donated by supermarkets, as well as cheap prepared meals.   

Here, customers can pick up a full trolley of food for around 30 euros.    

For Washah, that means bread, butter and her favourite sandwich filling, sausage – “which used to cost 99 cents but now sometimes costs more than two euros”.    

Driven by the war in Ukraine, inflation in Germany soared to 7.9 percent in May – its highest level since reunification in 1990, with food prices among those worst affected.    

Demand for food banks across the country has increased “significantly” since the start of the year and doubled in some areas, according to a spokeswoman for the Tafel food bank network.    

There are around 1,000 such schemes in Germany, run by volunteers and available to customers on a means-tested basis.    

Groceries, while donated, are still sold rather than given away free to the customers as the Tafel has to cover running costs, including rents and electricity. The organisation too has had to put up prices because their running costs have risen.    

“It’s not just one product,” said 69-year-old pensioner Peter Behme. “All the prices are going up.” 

Poverty line

In a bid to ease the pressure on squeezed finances, the government has lowered taxes on fuel, drastically slashed the cost of public transport and promised all taxpayers a one-off payment of 300 euros.    

But Behme remains unimpressed. “I don’t know where the government help is going,” he said.    

Even the food banks themselves are feeling the effects of the massive inflation.    

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“We have had to raise some prices by 20 or 50 cents because we need money to replenish our stocks,” said Malina Jankow, manager of the Bernau food bank.    

Along with pensioners and unemployed people, the queues are now also filling up with Ukrainian refugees.    

Anna Dec, a 35-year-old hospital worker, has come to Bernau with two Ukrainian women who are staying in her home and currently each receiving 449 euros a month in benefits.   

“They have to pay for water, energy, food, hygiene products… That’s almost nothing,” she said.    

Overwhelmed by the influx of customers, some food banks in Germany have had to turn away new arrivals or ration the food they distribute.    

“We have been asking the government for a long time for a law to force supermarkets to give away their unsold food,” said Norbert Weich, 72, chairman of the food bank.    

Some 16 percent of Germans, or more than 13 million people, were living below the poverty line in 2020, according to a study by the charity Deutscher Paritaetische Gesamtverband, published in December 2021.    

“The federation of food banks has a resolution: as soon as we are no longer needed, we will disband,” said Weich. “But I don’t think it will be in my lifetime.” 

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MONEY

‘€10-€15 more for groceries’: How price hikes are hitting consumers in Germany

Russia's war in Ukraine is driving up energy and food prices. While the German government mulls new measures to protect consumers, buyers are increasingly feeling the price hikes, reports Cecilia Filas.

'€10-€15 more for groceries': How price hikes are hitting consumers in Germany

Consumer prices are rising in Germany – and people are noticing it in their wallets. In May, inflation rose by nearly 8 percent year-on-year, the highest level since the country’s reunification in 1990. First, it was the pandemic and the resulting disruption of global supply chains that pushed up prices, now, it is Russia’s invasion of Ukraine that is driving energy and food prices to record high levels. 

Olaf Scholz’s coalition government launched a €30 billion plan to help German consumers, especially the most vulnerable. The measures included the €9 monthly ticket over summer; fuel tax cuts; energy subsidies; and a one-off €300 payout for all taxpayers, plus a €100 ‘Kinderbonus’ for children.

But while the measures provided temporary relief – in June inflation fell to 7.6 percent – experts fear another surge is around the corner. The numbers could get significantly worse in the coming months when some of the measures end and Germany will face the winter with a reduced amount of Russian gas – or none at all. 

READ ALSO: Who gets Germany’s €300 payout – and when?

Thinking carefully about bigger purchases

People living in Germany are feeling the pinch.

At the supermarket, a shopping bill that used to be between €70-€80 is “now €10 or €15 extra,” says Nicolás, an Argentine expat in his 30s who lives in Berlin.

Unlike in Argentina, where consumers are used to offers and different forms of financing to cover themselves against inflation, Nicolás says he has no strategy and has not reduced his consumption because of the rising prices, although it is impacting him. “You don’t need to pay in instalments (for items), but you do feel the difference. You save less,” he says.

Federico, another Argentina native who has been living in Germany for more than 10 years, agrees.

“It’s not that you have problems making ends meet, but that you save a little less,” he says. “Or if you have to make a big purchase, you might think about it a little bit more.”

He says everyday food products in Berlin have also noticeably gone up. 

“The most classic thing – to buy a kebab which is something everyone eats – you can see how much it has increased,” he adds.

“There is a lot of advertising on TV and radio showing you ways to save, and years ago there was no advertising or products with so many promos. Now, this has become more visible, as there is a much greater variety of bargains and people tend to go after that a little bit more than they used to.”

Fruit and veg being sold at a market in Oldenburg.

Fruit and veg being sold at a market in Oldenburg. Photo: picture alliance/dpa | Hauke-Christian Dittrich

‘Price shocks’

Chancellor Scholz has promised more measures in the coming months to cushion the burden, especially on lower-income families. The Chancellor plans to meet with employers, trade unions and the Bundesbank team in September.

Bundesbank President, Joachim Nagel, said recently that there is a risk of inflation remaining high in the medium term, and the German central bank is forecasting an average rate above 7 percent for 2022.

“For this year, we think that we can really manage the inflation headwinds we see on the energy side but also on the salary side,” Bettina Orlopp, CFO of Commerzbank told Bloomberg TV.  “Next years – 2023, 2024 – the story will be different, becoming more difficult”, she said.

But is Germany really experiencing an inflationary process? Dr. Silke Tober of the Hans Boeckler Foundation’s Macroeconomic Policy Institute (IMK) doesn’t think so.

“The inflation we are experiencing in Germany at the moment, and in the euro area as a whole, is not inflation in the real sense. What we have are price shocks”, she tells The Local. “What really makes an inflationary process is that wages and prices rise, and then you get persistent inflation.

“We are not at that stage. What we are really seeing instead is that the energy price hikes and the increase in food prices are pushing up prices.”

READ ALSO: When will Germany’s rising cost of living slow down?

Tober adds that there are assistance measures which make a difference.

“The government has put in place several transfer payments to households, especially low-income households, and other measures that reduce the burden of inflation,” Tober says.

She expects price rises to come down “substantially” next year, provided the war in Ukraine does not escalate.

However, Tober says: “If we have a gas embargo and no more gas from Russia, we will have another jump in energy prices, and then inflation will stay high next year as well. And then we have the problem that there may be second-round effects, meaning wage increases might be excessive and then will have persistent inflation.”

The expert from IMK says that rising prices are especially affecting lower-income households, who must “cut back on other expenses to pay for food and energy” because they tend to have fewer savings to fall back on.  

“Households with higher incomes tend to have wealth and a high savings rate, so they cope with it by reducing their savings rate or maybe even reducing their savings,” Tober says.

“But low-income households usually, in Germany at least, they don’t have a positive savings rate – that means they’ve already spent all of their money or most of it – and have very little wealth, so what they have to do is actually reduce consumption to deal with the current [price] shocks.”

READ ALSO: What is Germany’s new gas ‘tax’ and who will pay it?

Money lies on a radiator.

Money lies on a radiator. People with gas heating will face much higher costs. Photo: picture alliance/dpa | Patrick Pleul

Ongoing concerns about price hikes

Indeed, June retail sales plunged 8.8 percent year-on-year, the biggest drop since 1994, according to Destatis. Non-essential items such as furniture, household appliances, clothing and shoes were the hardest hit.

On the other hand, to avoid passing on cost increases to customers and remain competitive, several companies are maintaining prices (or raising them at a very low rate) but reducing the content of their products, warned Verbrauchenzentrale Hamburg, a consumer advice centre. These are hidden price increases, generally referred to as ‘shrinkflation’.

With an interest rate of just 0.5 percent, credit or financing purchases in instalments might seem an attractive option to protect from inflation.  However, Verbrauchenzentrale Nordrhein Westfalen, the consumer protection association in the state of North Rhine-Westphalia, says that there hasn’t been, at the moment at least, “increasing demand in our debt counselling service as a result of the current inflation, although we notice ongoing concerns about the price increases”.

“Normally excessive debts and consumer insolvency are not seen immediately but with a time gap -they follow a crisis,” the agency told The Local. “Therefore, it is just possible that in the end, we will see more consumer insolvencies due to these general price increases.”

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