Everything was better in the old days, right? Well maybe not healthcare, electronics, and women’s rights, but at least everything was affordable. It seems life has been getting more and more expensive, especially for Millenials. But is that really true? Are we just overinterpreting inflation or are we indeed paying more today than we ever have? In Germany, ice cream is an integral part of the felt inflation, one that paints a grim picture for the price development in recent years within the country. Or so do people think.
When I was five, I was unaware of the real world, I was a kid after all. My sense of the intricate workings of the economy didn’t surpass my afternoon playtime exchanging cookies for plastic fruit over a makeshift counter with kids my age. What I was painfully aware of, however, was that everything was getting more expensive. Why? Because my adult surrounding was very eager to point it out at every turn. Especially when it came to ice cream prices.
I cannot speak about other nations, but Germany seems to be obsessed with ice cream prices. So much so, that even reputable news outlets cover the price hikes every year when the season starts. Their conclusion? A scoop of ice cream in 2013 cost 684% more than in 1985. Is that still inflation? I, too, remember a time where an ice cream scoop would just cost half a German Mark, but now we are nearing (and occasionally surpassing) one Euro.
It’s not the only thing that increased in price, but it feels like the most talked about product when looking at price increases and stuff becoming more expensive. But are they really, or is the increase in sales prices just a product of our imagination and easily explained with the current inflation rate of a country?
It’s in the Ice Cream: Felt Inflation in Germany
The inflation rate of a country has to be the culprit here. Logic dictates that, with an increase in inflation, prices would also increase. However, there is a disparity between those numbers. The prices of consumer goods in Germany have risen 1,8% on average in past years. If you ask people on the street, their felt average lay at 6,6%.
There are several reasons for that. For one, we tend to not notice slight price decreases, whereas increases are almost instantly noticeable. It also depends on the goods you consume. If you are an ice cream aficionado in Germany, chances are you have noticed drastic price hikes that far surpass the inflation rate mentioned.
The reason is mainly that ice cream parlors are mostly privately owned and mirror a variety of costs. In addition to ingredients, there are increased wages and ever-rising rent costs for buildings or the fact that maybe people just tend to try and make more money with their products. In any case, not every single product is equally representative of real-world inflation. A lesson that is especially apparent when looking at the price developments in the US.
Living Cost in the US as High as Ever?
It’s not easy to compare the eras and generations of yesteryear to today and come to shallow conclusions of who may have been living cheaper. While prices increase, so do wages, making it an easier burden. Globalization, too, has distorted the way prices are generated for the consumer with cheap labor available abroad. Nonetheless, life on average has indeed become more expensive for us Millenials, and the reason isn’t food or, dare I say it, ice cream.
Goods like food have had an increase that is in line with the US inflation rate and some products, such as electronics, have drastically decreased in price making them as cheap as ever. It often comes down to a mixture of how much of a product and where it is produced to determine its price regardless of inflation. However, there are products that are arbitrary to begin with.
Millenials are Paying the Price
One of the steepest price increases in the US in recent decades can be found in tuition fees and healthcare. In the last decade, tuition fees have seen a price increase of close to 200%. And if that isn’t enough of a burden for those seeking education, rent prices are currently among the fastest rising consumer prices at 4% annually. These increases aren’t reflected in inflation, they reflect the working business sense of those that stand behind them. And maybe the loss of living space in cities.
The book “Pound Foolish” by Helen Olen shows that families in 2000 would spend 75% of their income on housing, healthcare, and education, whereas a family 30 years prior would have spent merely half their income for that. Sure wages have risen as well, but not to a point that would rectify the actual price explosion in education, rent, and healthcare.
Long story short, yes life is becoming more expensive, but not necessarily where we notice it the most. Millenials seeking higher education are the ones that get hit the worst in the US. In Germany however, being subject to subsidized and mostly free healthcare and education, ice cream may be one of the more pressing concerns when it comes to skyrocketing consumer prices.
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