Germans have an average per capita purchasing power of €23,766 in 2020 according to GfK’s latest purchasing power study. Based on the revised value from last year, this corresponds to an increase of 2.9 percent per Person.
GfK forecasts a total purchasing power of €1,973.0 bil. for Germany in 2020. Germans will conse-quently have an average per capita purchasing power of €23,766 available for consumer purchas-es, living expenses, recreation and saving in 2020.
Purchasing power is a measure of the population's disposable net income, including government subsidies such as pension payments, unemployment assistance and child benefits. But the actual amount available from this nominal purchasing power increase depends on how consumer prices develop over the course of 2020.
Regional distribution of purchasing power
There has been a change at the level of Germany’s federal states in 2020 compared to last year: With a per capita purchasing power of €25,982, Bavaria takes first place, ousting the previous year’s forerunner of Hamburg to second place. Along with Bavaria and Hamburg, Baden-Württemberg and Hesse continue to have above-average purchasing power, while all other federal states have below average purchasing power.
Purchasing power in Germany’s districts
As in previous years, the Bavarian rural district of Starnberg leads the way among Germany’s 401 urban and rural districts: With €33,977 per person, inhabitants of this district have 43 percent more purchasing power than the national average. The urban district of Munich is the only urban district in the top ten. With a per capita purchasing power of €31,979, this district has almost 37 percent more purchasing power than the national average, putting it in fourth place.
Changes from the previous year have occurred in the top-ten rankings with respect to places seven through ten. The rural districts of Dachau (ranked seventh) and Fürstenfeldbruck (ranked eighth) switch places, which is also the case for the rural districts of Böblingen (ranked ninth) and Miesbach (ranked tenth). The rural district of Görlitz in Saxony brings up the rear in the district rankings with a per capita purchasing power of €18,613, which is around 78 percent of the national average.
Purchasing power in the most populous urban districts
Germany’s 25 most populous urban districts together comprise more than one-fourth of German’s total purchasing power. Even so, this does not mean that all large cities in German have above-average purchasing power. The capital city of Berlin has a per capita purchasing power that is around nine percent below the national average, with Dortmund and Dresden coming in at a similar level. Leipzig is even further below the national average (-13 percent), while Munich and Düsseldorf are significantly above it (around 35 and 17 percent, respectively).
High purchasing power density in hotspot areas
Given their concentrations of purchasing power, Germany’s most populous cities and particularly the large metropolitan regions are indispensable target markets for retailers and service providers. Purchasing power density, or the available purchasing power in millions of euros per square kilo-meter, is very high in cities such as Berlin, Hamburg and Munich as well as in the Ruhr region and the greater metropolitan areas of Stuttgart and Frankfurt/Main. High purchasing power density means that companies with the ability to motivate their target groups can tap significant purchasing power potential within a small geographic area, even without considering shoppers coming from further afield.
About the study
GfK Purchasing Power is defined as the sum of the net income of the population, as measured at the place of residence. These purchasing power figures take into account income related to self- and non-self-employment as well as capital gains and government subsidies, such as unemployment assistance, child benefits and pension contributions. Not included in these calculations are expenditures related to living expenses, insurance, rent and associated costs such as utilities (gas and/or electricity), clothing and savings plans.
As a result, a nominal increase in purchasing power does not necessarily mean that each individual has more actual money at his or her disposal, as sometimes rates for the above-mentioned expenditures can exceed any purchasing power increases. It is also important to note that the purchasing power of a given region reflects an average value rather than the purchasing power of specific individuals, households or the associated income distribution and gap between "rich" and "poor".
Calculations are carried out on the basis of reported income and tax rates, statistics on government benefits as well as forecasts provided by economic institutes. GfK releases the purchasing power prognosis for the new year in January. From that point onward, GfK purchasing power data is available for all of Germany's urban and rural districts, municipalities and postcodes. GfK updates its purchasing power data at the level of street segments in the second half of the year.
Applications of purchasing power data
Regional GfK purchasing power data serves as an important planning basis for sales and marketing endeavors among companies from a diverse range of industries. A key insight provided by the data is an accurate depiction of the regional distribution of purchasing power. The focus of GfK’s study is consequently not on tracking data trends over the years, but rather on providing a prognosis that reflects this regional distribution. GfK therefore strongly advises against comparing current figures with data from previous years.
on GfK’s regional market data can be found here.
can be found here.
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