Why inflation is perceived to be so much higher

According to a survey by IU International University of Applied Sciences (IU), more than half of consumers are currently very worried.

• Perceived inflation is 34.2 percent, measured inflation is 7.9 percent (as of August 2022, destatis).
• More than 90 percent of those surveyed are worried about rising prices, 54.6 percent are even "very worried".
• The greatest sacrifices were made in the areas of energy, household goods and travel, and the least in education and entertainment.
• Women cut back more than men, are more worried and have a higher perception of inflation.

Erfurt, 29 September 2022. There is an apparent striking difference between measured and perceived inflation in Germany: according to a survey by IU International University of Applied Sciences (IU), consumers feel that daily life has become 34.2 percent more expensive. For women, the perceived price increase is even 39.3 percent (men: 29.0 percent), however the actual measured inflation rate was 7.9 percent in August according to the Federal Statistical Office.

Overstated: Why we think prices are rising so much

"We always perceive inflation where we have consumer spending. People are interested in what they have to pay every day to meet their basic needs. If we notice every time we go shopping that the basket of goods is getting more expensive, we tend to exaggerate the real increase overall," Dr. Johannes Treu, Professor of Business Administration at IU explains. People are much more aware of the prices for everyday things like electricity, petrol, food, he says. "In fact, prices are falling in other areas, such as for televisions, computers, cars, it's just that we don't consume these things on a daily basis," Treu explains. 

Inflation: More than half are "very worried"

The vast majority does not see an end to the current inflation, on the contrary: 82.4 percent of the respondents (women: 85.9 percent, men: 78.8 percent) expect prices for goods and services to be "much higher" or "higher" in October than in September. Rising prices are a concern for 91.9 percent of respondents, and more than half (54.6 percent) are even "very worried". 

"If I feel inflation is high, I automatically expect it to get even more expensive," explains Professor Treu. As a result, companies would raise prices even more and trade unions would demand higher tariffs. "Our expectations thus fuel the price development," Treu explains the interaction and advises: "We have to lower our expectations so that there is no further actual price increase."

Reduced: Many see savings potential above all in energy, household goods and travel

In its survey, IU also tapped into the areas in which Germans are tightening their belts significantly in view of the price increases and where they are doing so less. 80.8 percent of the respondents cut back "a lot" or "a little" on energy costs for water, electricity, gas, etc., 76.5 percent on the purchase of new household items and 73.0 percent on travel and hotels. According to the survey, the least savings were made in education. 26.8 percent of the respondents do not cut back at all in this area. When it comes to entertainment and enjoyment, budgeting is also less pronounced: 24.4 percent of respondents do not cut back on media/entertainment, nor on alcoholic beverages/tobacco products (20.7 percent).

Another result of the short study: across all the areas surveyed, which included leisure/culture, clothing, health, other goods/services, savings/reserves, food and mobility, women tend to restrict themselves more than men.

About the survey

As part of the short study "Current inflation. How does it feel?", IU International University of Applied Sciences surveyed 1,200 people between the ages of 16 and 65, representative by age and gender.

The factsheet with the survey results can be found under this link .

Prof. Dr. Treu will be happy to answer your interview requests as an expert. Please use the contact details below to get in touch.

ABOUT IU INTERNATIONAL UNIVERSITY OF APPLIED SCIENCES
With over 85,000 students, IU International University of Applied Sciences (IU) is the largest university in Germany. The private, state-recognised higher education institution offers more than 200 bachelor's and master's degree programmes under its roof, available in German or English. Students can shape their studies their way through the help of a digitally supported learning environment with various study models, such as dual study, distance learning and myStudies – which combines online and on-campus studies. In addition, IU facilitates continuing education and promotes the idea of lifelong learning. In alignment with the university’s mission, it aims to provide access to personalised education to as many people worldwide as possible. IU began operations in 2000 and is now represented in more than 30 German cities. It cooperates with over 10,000 companies and actively supports them in employee development. Its partners include Deutsche Bahn, Motel One, Telekom, Vodafone und VW Financial Services. Further information at: www.iu.org