Inflation rates in Germany

Performance over the last 62 years compared with the USA

Negative inflation rates are only achieved in a few countries. This means that the general price level is declining and consumer prices are becoming cheaper. In this case, one also speaks of deflation. The quite drastic price increases in Germany at the beginning of the 1980s and 1990s were no longer average compared to other countries and are often a sign of political and economic turbulence.

Performance based on 100% in 1959:

      Germany       USA

Reasons for the changes in the inflation rate

Since 1995, German and European inflation rates have fallen noticeably. At less than 1 percent in some cases, the German treasury was even below average. This can be attributed to, among other things, long-term fluctuating crude oil prices, which are reflected in petrol and heating costs. But the specifications of the European Union also have an influence here. Thus, the European Union aims at a medium-term rate of 2 percent per year over the entire euro zone as the optimal inflation rate. Germany is the largest economy in the euro zone and therefore has a considerable influence on the overall picture. To achieve this goal, the European Central Bank (ECB) pursues a more or less relaxed monetary policy, in which, for example, bonds are bought for trillions of dollars to stimulate the economy or key interest rates are varied to influence loans and money supply.

Perceived inflation

Actual inflation is often different from that perceived by the citizen. This is mainly due to the fact that although the basket of goods measured contains numerous everyday products, there are also high-priced products such as real estate, cameras or televisions. A price increase is less frequent for small items such as butter, bread or eggs, and in the 10 cents range. So, a price increase of significantly more than two percent. At the same time, these items are bought at a considerably higher frequency than washing machines or cars, which is why the citizen "feels" a higher inflation rate.

Thus Germany measures the inflation

Since 2002, the Federal Statistical Office has measured inflation rates with a "hedonic price adjustment." This involves the use of the well-known shopping basket model, in which the prices of representative goods are determined regularly. In special product groups, such as electronics and medicine, goods naturally become more expensive if they are changed over time as a result of further development and quality improvements. At the same time, obsolete goods, such as computers, are no longer available in later years. To compensate for this, ongoing product improvements are therefore included in sub-indices.

Inflation rates for consumer goods in Germany

Energy and food

      Energy       Food

Historical inflation rates in comparison

Data basis: International Monetary Fund, World Bank and OECD Inflation CPI indicator (doi:10.1787/eee82e6e-en)