Personal inflation calculator
Personal inflation calculator – what is it all about?
The consumer price index is the central indicator of how the value of money is developing in Germany. It is used as a benchmark for instance in wage negotiations or contractual agreements on recurring payments (called stable-value clauses). It is also used for purposes of deflation in national accounts, for example to calculate economic growth in real terms.
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 products in the basket are subdivided into about 600 types. To compute the inflation rate, the average price development compared to the base year of each product type is weighted with the expenditure share spent on this type of product by households in Germany. The weighting information is contained in the "weighting pattern", as it is called.
This means that the development of the consumer price index does not only depend on the price changes of the products in the basket. Another decisive factor is the weight that the price changes of individual product types have in the overall index. The inflation rate cannot mirror a person’s individual situation as it refers to the final consumption expenditure of all households in Germany. Those who have no car, for example, will not spend money on petrol – but petrol is contained in the basket of price statistics. To what degree a household is affected by inflation depends on its specific consumption pattern, that is, how much money it spends on what products.
How much does my personal inflation rate differ from the official one?
You can use our "personal inflation calculator" to reflect your personal consumption pattern and illustrate the impact of the weights in a simple manner. Just alter some of the weights of the weighting pattern by means of the sliders. You will then see in a graphical representation what the change of the weights does to the inflation rate.
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