Above-average rise in inflation in Saxony

Consumer prices in Saxony have risen significantly faster than the national average over the past five years. From 2020 to 2025, inflation was 1.7 percentage points higher than the national figure of 21.8 percent, according to an analysis by Ifo Dresden.

Only in Brandenburg was inflation even higher, with an increase of 1.8 percentage points. In Saxony-Anhalt and Bremen, it was 1.6 and 1.7 points above the national average respectively. At the other end of the scale is Hamburg, where inflation was 2.1 percentage points lower.

Services as a key price driver

As in the other eastern German states, the analysis found that the area of other goods and services was the main driver of inflation. These include hairdressing services, care in social institutions and insurance, such as for cars.

"It is conceivable that the increase in the minimum wage could have a greater impact on prices in eastern Germany than in the western German states," write the authors Ricarda Kluth, Robert Lehmann and Marcel Thum.

The growing demand in the eastern German states due to the older population structure also argues for a greater increase in the cost of care services. Why insurance services have become more expensive, on the other hand, cannot be clarified with the data.

Saxony exception in housing costs

Housing, water and energy play an important role in the differences between the federal states. In most of the eastern German states, this had a price-dampening effect. According to the Ifo Institute's analysis, Saxony is an exception here: this item did not contribute to a lower inflation differential compared to the federal government.

Real wages rising despite high inflation

When looking at wages, however, the picture is more favorable. The data analyzed by Ifo only covers the period up to 2024. In Saxony, hourly wages increased by 1.3 percentage points more than prices in real terms during this period. Thuringia performed best with an increase of 3.6 percentage points, followed by Berlin with 2.6 and Mecklenburg-Western Pomerania with 2.5. Brandenburg came in at 1.7 percentage points and Saxony-Anhalt at 1.4.

The most negative result was in Bremen, where weaker wage growth was accompanied by above-average price increases. This resulted in a real decline of 3.9 percentage points.