The high inflation in Germany is also making life difficult for savers.

They still get - if at all - hardly any interest worth mentioning on their deposits with the financial institutions.

The first rate hike by the European Central Bank in eleven years in July by 0.5 percentage points is only slowly beginning to take effect.

According to the most recent forecast by the Deutsche Bundesbank, the overall inflation rate could reach a magnitude of 10 percent in autumn.

Kerstin Papon

Editor in Business.

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Archibald Preuschat

Editor in Business

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In May, inflation in Germany was 7.9 percent, the highest it has been in 50 years.

For July, the Federal Statistical Office assumes an estimated 7.5 percent.

For comparison: According to Finanzberatung FMH, the Spareck interest rate remains unchanged at 0.01 percent.

At most, overnight or fixed-term deposits show a slight upward movement (see chart).

This inflation eats up the additional savings of the Germans.

This is now a warning from the Munich Ifo Institute on Tuesday.

The economic researchers are not even concerned with the clearly negative real interest rates caused by high inflation.

"The savings cushions from the Corona period have now melted away in many households," says Ifo economic chief Timo Wollmershäuser.

This is the result of an analysis of the bank balance sheets by the institute.

According to this, deposits from private households at banks in Germany initially rose sharply between the second quarter of 2020 and the first quarter of 2021.

"If you take the average Germans' propensity to save in the five years before the outbreak of the corona crisis as a basis, a good 70 billion euros more were parked in bank accounts than usual during this time," says Wollmershäuser.

The savings rate was 15.5 percent in the past two years, after an average of 10.6 percent in the five years before.

Inflation eats up corona savings

However, according to calculations by the Ifo Institute, these excess deposits were almost completely eliminated by the end of the first quarter of 2022.

In the second quarter of the year, this development continued at an almost unchanged pace, with the volume of total bank deposits even falling below the value that could be expected based on disposable income and savings behavior in the five years before Corona.

"The high level of inflation is likely to have been the driving force behind this 'dissaving' by households," says Wollmershäuser.

By drawing on the excess savings and gradually dissolving them, households could have maintained their standard of living, measured by the amount of goods and services consumed.

This would not have been possible with the increase in income alone.

Restrictions on consumption would quickly have been the result.

It is questionable, however, how long households will continue to access their reserves.

Savings Bank President Helmut Schleweis even warned in an interview last weekend: "We expect that due to the significant price increase, up to 60 percent of German households will have to use their entire disposable income, or more, monthly for pure living expenses." i.e. no longer able to save at all.

Fortunately, this trend has not yet caught on with the savings banks themselves.

Because it would also pose a threat to the business models of these public institutions.

If there is a lack of deposits, there are also no funds on the balance sheet that can be passed on to private customers and companies as loans.

So far, however, the fresh customer funds have been flowing, albeit not at the high level of the corona pandemic, when people were unable to spend their money due to the restrictions and also saved out of caution.

Currently no "trend change"

"We are already noticing some uncertainty among customers, but are currently not seeing any noticeable effects on the inflow of deposits," says Stefanie von Carlsburg, spokeswoman for Hamburger Sparkasse, which with total assets of around 60 billion euros is by far the largest institution in the public sector. legal pillar: “Our deposits are still high, but we are also happy about new deposits and that we can finally pay interest again.

This has no effect on our lending, we can continue to grant sufficient loans independently of it.”

The Frankfurter Sparkasse, which is number five among the 370 public institutions with a balance sheet total of around EUR 22 billion, currently sees no “change in trend” in the deposit business.

"However, we share the concern that people are increasingly being deprived of their financial leeway as a result of the ongoing record inflation," says CEO Ingo Wiedemeier: "The higher cost of living will inevitably depress consumer sentiment and also mean that less for the old-age provision can be set aside."

The industry still seems miles away from a competition in insoles.

"As a bank known to have large deposits, we don't see any risk that we would have to limit our lending," he says.

With the elimination of the custody fee, there will certainly be more competition for customer deposits again, says the spokesman for the Stadtsparkasse Düsseldorf, which is number ninth in the republic in terms of total assets.