According to our updated estimate, these savings in Germany could have peaked at about 180 billion euro in the first quarter of this year. In addition, governments are taking action to cushion the impact of energy price increases with support measures, not least for those most affected. On the other hand, high inflation is not only eroding households’ purchasing power.
High inflation and the uncertainties related to the war are also weighing on their confidence. Surveys show that consumer sentiment has deteriorated considerably. Households could be putting off purchases for precautionary reasons. The Russian attack on Ukraine has added new layers of risk. When the attack began, Germany and the euro area expected a strong recovery from the pandemic crisis.