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Basket of goods and services and weighting pattern

Basket of goods and services

Calculating the consumer price index is based on a basket which includes all goods and services that are relevant components of consumption in Germany. The basket is continuously updated in order to include those goods in the price observation which are frequently bought by consumers at present. Concrete products are selected for price monitoring in the context of representative sample surveys. Therefore, first of all the whole federal territory is divided into 94 regions. Usually in every region first representative cities and municipalities are chosen. In these cities and municipalities then representative shops and there the most frequently sold goods and services are selected. The number of selected goods and services is based on the share of expenditures for a type of good in the total household final consumption expenditure. In order to cover the whole range of household final consumption expenditure, also for less categories goods and services need to be included in the sample.

To measure price trends, price collectors collect the prices of the same products in the same shops in Germany 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. The prices taken for price observation are purchaser's prices (including VAT and excise duties). An item selected for price monitoring purposes is replaced by another one, if the former is only seldom or no longer sold.

Weighting pattern

For calculating the consumer price index for Germany, first of all the products included in the basket of goods and services are broken down by approximately 600 types of goods and services. The average price trend compared to the base year for a type of goods and services is weighted with the average proportion of the budget the households spend on this type of goods and services. The result is a weighted average reflecting the price trend in Germany. The weighting information is included in what is called a weighting pattern (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 completed and updated by data of the continuous household budget surveys, which provide information on the detailed breakdown of household final consumption expenditure by individual types of goods and services. Subsequently, these results are verified and, if necessary, revised by using additional information. The shares of expenditure for the individual types of goods and services are based on the total final household consumption expenditure in the base year. For example if a household did not buy a durable consumer good in the base year, its expenditures are nevertheless counted. In this way it is taken into consideration that households in general do not buy a washing machine, a television, a car or something similar every year.

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