The inflation rate is calculated using the price increase of a product basket defined by the German Federal Statistical Office. This product basket contains services and products, on which the average consumer spends money throughout the year. This includes expenses for groceries, clothes, rent, power, telecommunications, recreational activities and raw materials (i.e. gas, oil), as well as federal fees and taxes.
The term inflation means the devaluation of money caused by the increase of the price level of products (consumer goods, investment goods).
The Consumer Price Index shows the price trends for private consumption expenses and shows the current level of the inflation when increasing.