During the first lockdown due to the coronavirus pandemic, considerably more households in Germany expected the rate of inflation to rise compared to one year before. Likewise, the proportion of households expecting falling prices was significantly higher at the beginning of 2020 than in the year before. During summer and autumn 2020, inflation expectations somewhat decreased, but increased again in December and are now in March 2021 only slightly below 3%. In January 2021, they had temporarily returned to the level of autumn 2020, before trending upwards in February 2021. Compared to December 2020, the share of respondents expecting at least slightly rising prices has increased significantly.
Despite the coronavirus crisis, about three out of four respondents expect real estate prices in their region to rise over the next 12 months in March 2021. At the end of 2020 real estate price expectations rose to around 8% and were at 7% in January 2021. In February 2021, expectations regarding real estate prices rose to about 9% and remained at that level in March 2021.
The worsening of the coronavirus crisis in autumn 2020 also had an impact on expected income growth. Like in spring 2020, households expected on average that their mean monthly net income would decline. Since the beginning of the year 2021, however, expectations regarding household income have continuously increased compared to year-end 2020. In February 2021, income expectations were positive for the first time since the beginning of the pandemic, and continued to rise in March 2021.
The Deutsche Bundesbank conducts regular surveys of households’ expectations for unemployment, economic growth, rent prices, real estate prices, and interest rates on savings and loans. These data are used to calculate index figures, from which corresponding trends can be easily derived.