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Joined 1 year ago
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Cake day: July 7th, 2023

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  • Yes, the 2.3% increase is the inflation rate for July 2024 versus 2023. Regarding the “how is it measured”: This is an interesting topic.

    Typically, inflation is measured by tracking a consumer price index (CPI) over time, which is a weighted average of prices for a wide selection of consumer goods (i.e., a typical “market basket”) and other living expenses (e.g., rent). The weights are computed on the basis of surveys, and the prices are tracked in a decentralized manner by market watchers (both online and in stores). The German federal statistics agency has a documentation for their weighting method here. They also provide a tool for computing a personalized inflation rate that is adjusted to someone’s individual consumer behavior.

    One interesting part about rent is that it typically reduces estimated inflation rates when they receive a large weight in the computation, because large rent increases happen only when people move to a new apartment (which happens relatively rarely, so the impact of rent increases on yearly inflation is often relatively low). There are also other indices that use different weights and track different goods and services, so the inflation rate will be different for those.