Basket of goods and services and weighting pattern

Basket of goods and services

Calculating the consumer price index is based on a basket of goods and services which includes all goods and services that are relevant components of consumption in Germany. The basket is continuously updated in order to include the goods which are frequently bought by consumers in the current price observation. Concrete products are selected for price monitoring in the context of representative sample surveys. Usually, the procedure is the following: First representative towns or cities are selected. In a second step, representative shops are selected in these towns or cities. And, finally, the products are selected which are sold most frequently by the shops elected.

To measure price trends, about 600 price collectors collect the prices of the same products in the same shops in a total of 188 municipalities every month. In addition, prices are centrally collected for many types of products, for instance, via the internet or in mail-order catalogues.
On the whole, more than 300,000 individual prices are collected every month. An item selected for price monitoring purposes is replaced by another one, if the former is only seldom or no longer sold. Quantitative changes are also considered in price comparisons. If, for instance, a seller changes the quantity of a product included in a definite package, while the price remains the same, price statistics will record such changes as price increases. In addition, qualitative changes are taken into consideration, too. This applies, for instance, to goods which are subject to technological progress. The prices taken for price observation are purchaser's prices (including VAT and excise duties).

Weighting pattern

As a next step, the products included in the basket of goods and services are broken down by approximately 700 types of products. To calculate the overall rate of price increase, the average price trend for a type of products is weighed with the average proportion of the budget the households spend on this product type. The result is a weighted average reflecting the price trend in Germany. The weighting information is included in what is called a weighting pattern (graphic or PDF download). Unlike the basket of goods and services, the weighting pattern used for the compilation of the consumer price index is updated at five-year intervals in order to reflect the genuine price development irrespective of changes in expenditure weights.

The essential basis for determining the weighting pattern is the sample survey of income and expenditure. The number of participants in this household budget survey amounts to approximately 60,000. On a voluntary basis, the participants record their income and expenditure over a period of several months, and they transmit the relevant information to the statistical offices of the Länder. The basic information obtained in this manner is refined by some additional minor surveys, which provide information on the detailed breakdown of household expenditure by individual types of products. Finally, the results of the household budget surveys are integrated at the Federal Statistical Office. Where necessary, corrections are made using additional information, for instance, from excise duty statistics.

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