MIL-OSI Translation: Every fourth household spends more than ten percent of its income on energy

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MIL OSI translation. Region: Germany/Germany –

Source: Cologne Institute for Economic Research Due to the war in Ukraine, energy prices are rising rapidly – an enormous burden for German households. A new study by the German Economic Institute (IW) shows that households are spending an increasing part of their net income on energy – even the middle class is suffering badly.

Almost 25 percent of all households in Germany spent more than ten percent of their net income on energy in May 2022. For comparison: in 2021 it was only 14.5 percent of households. Overall, households from all income brackets are affected by rising energy prices. However, the burden varies: the higher the income, the lower the share that is due for energy. As soon as a household spends more than ten percent of its net income on energy, it is considered “energy poor”. An energy-poor household currently spends an average of 206 euros per person per year on energy. Energy poverty also affects the middle class Meanwhile, the high prices are no longer just a burden on households with lower incomes. “Energy poverty also affects the middle class,” says IW economist Ralph Henger. In fact, it can also be observed in the lower middle class that the proportion of so-called low-energy households is increasing. This affects households that earn between 60 and 80 percent of the median income. Between 2021 and May 2022, the proportion of low-energy households in this income bracket doubled to almost 41 percent. Households below the risk of poverty line – i.e. those with less than 60 percent of the median household income – are particularly affected. 65 percent of these households are considered energy-poor. Compared to the previous year, this is an increase of 16 percentage points. In order to pay their electricity, gas and oil bills, many of these households will be dependent on support in the future. Additional help requiredRecipients of basic security are reimbursed for heating and hot water costs, so the priority here is to assume the costs promptly and adjust the standard rates to the higher electricity costs. The IW researchers advocate targeted help for households that are just above the basic security limit. Many of the measures in the two relief packages, such as the abolition of the EEG surcharge on July 1, will provide the greatest relief to this group. In addition, those receiving housing benefit and a one-off heating subsidy over the next few months should receive more benefits. “A permanent and flexibly adjustable flat rate for heating costs in the housing benefit, as in 2009 and 2010, can support low-income households in a targeted and permanent manner,” says IW economist Ralph Henger.

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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.

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