Inflation

In short: Inflation is a general rise in prices. With the same sum of money you can buy less later.

In more detail: In Germany it is measured with the Consumer Price Index (CPI) of the Federal Statistical Office, which tracks a basket of typical expenses. The target of the European Central Bank is about 2 % a year.

In Depth

• Real interest: interest minus inflation. At 3 % interest and 2 % inflation, purchasing power only grows by about 1 %.
• Personal inflation: People who buy a lot of rent, energy or food often feel different rates from the average. The budget book shows your own development.
• Causes: demand, rising costs (energy, wages), currency movements, scarcity.
• Effects: Saving in a current account loses value in real terms, debts shrink in real terms.
• Index-linked rents and tariffs: Some contracts tie the price to the CPI.

See also: Compound interest, Emergency fund