Inflation in Germany: What is now becoming more expensive and what is becoming cheaper

Life in Germany is getting more expensive again. In September, consumer prices were 2.4 percent higher than in the same month last year – the highest increase of the year. But what does this mean for you specifically?

The average often reflects major price fluctuations in various product groups. Some goods and services become significantly more expensive, while others become noticeably cheaper.

Even if prices remain stable on average, a lot changes for people, for example, when the weekly shopping trip becomes significantly more expensive, while the new smartphone becomes cheaper every few years. Consumption often adjusts to the prices: Instead of brand-name coffee, the no-name variety ends up in the shopping cart. Many families go to restaurants less often.

Every month, the staff of the Federal Statistical Office determine the exact cost of fruit and vegetables, shoes, and furniture. How much is rent, how much is gas at the gas station? Thousands of individual prices for goods and services are recorded representatively according to a consistent format.

In order to depict the price fluctuations in Germany in detail, this editorial team calculates the most rapidly rising prices on the one hand and the most rapidly falling prices on the other hand on a monthly basis.

The Federal Statistical Office calculates the consumer price index from the prices of these and many other everyday consumer products. The monthly change in this index compared to the same month of the previous year is referred to as the inflation rate. A sustained increase in the price level is referred to as inflation, while a sustained decline is referred to as deflation.

The extent to which price changes of individual goods and groups of goods affect the overall consumer price index depends on their weight in the basket of goods. These weights are based on private household spending.

The currently used weights assume that Germans spend an average of around 26 percent of their income on housing and utilities, 14 percent on transportation, 12 percent on food, 10 percent on leisure and culture, 7 percent on furniture and household accessories, 6 percent on healthcare, and 5 percent on restaurant and accommodation services. Germany also has a special feature: The "assumed net rent" of property owners is included in the price statistics as a so-called fictitious rent.

The basket weighted in this way represents the consumption of an "average citizen." Each individual's personal inflation rate can deviate significantly from the average inflation rate. Because everyone allocates their income differently among the various types of goods. Train passengers can safely ignore the development of fuel costs, and vegetarians can ignore the price of beef.

The usual ups and downs of various product groups sometimes affect some, sometimes others. However, in Germany's recent history, price increases have generally remained within the planned range. The European Central Bank aims for an annual average inflation rate of below, but close to, 2 percent.

The inflation surge in 2022 and 2023 was an exception. Food and energy prices, in particular, rose in the wake of the war in Ukraine. Consumers in Germany had to pay an average of almost 30 percent more for the same amount of energy (such as gas, heating oil, fuels, or electricity) in 2022 than in the previous year.