After an official inflation rate of almost 10% in October 2022, a recent inflation rate of 2.6% in May 2026 feels much more relaxed – yes, almost harmless. Yet in everyday life, this figure can differ significantly from the statistics. Everyone has their own costs for rent, the weekly shop, insurance, the car or heating. In addition, a single person with an inexpensive apartment, a short commute and low mobility costs experiences 2.6% very differently from a family with two children and the corresponding expenses. Both cases appear in the same consumer price index, but they do not have the same inflation. In the end, everyone has their own rate, which may be above or below the official figures.
For building wealth, this distinction matters, because monthly expenses and costs always affect one’s own ability to save. The average household does not build wealth for you; your own account always does.
Statistics are never personal
The consumer price index measures the price development of a defined basket of goods and services. It includes expenses that private households typically have: housing, energy, food, transport, leisure, health, communication, clothing and much more. Without this average value, inflation could hardly be calculated cleanly. The problem, however, is that an average can never simply be turned into one’s own personal truth.
The Federal Statistical Office (Destatis) even points out itself that personal inflation depends on one’s own spending. Someone who has no car is affected by fuel prices differently than a commuter. Someone who lives cheaply feels rents differently than a young family that suddenly needs more space, and someone with small children shops differently than a retired household or a student. Official inflation therefore answers a different question. It merely states how prices have developed on average, but not how much room one’s own household still has left. That is where personal inflation begins.
Your own basket determines your savings rate
Inflation becomes personal as soon as the large cost blocks rise. Housing, energy, food, mobility, insurance and family are not the same for every household. A household without a car benefits little if fuel becomes temporarily cheaper. A commuter, by contrast, notices immediately when petrol, repairs, tires, insurance or spare parts become more expensive. A tenant in an old existing apartment has a different starting point from someone who suddenly pays a current market rent after moving. Anyone who spends a high share of net income on food feels price increases in the supermarket more sharply than a household where leisure and travel make up the largest item.
This is often ignored in financial planning. Many households calculate with the official inflation rate as if it were their own. Then they wonder why the savings rate falls even though the headlines claim something else. Personal inflation does not only depend on which prices rise. It depends on how much weight they have in one’s own budget. If housing ties up 35% of net income, a rent increase is not a small side item. If the car is needed for the commute, mobility costs are not a lifestyle issue, and if insurance, daycare and food all become more expensive at the same time, this does not hit one’s own consumption. It hits the ability to turn income into wealth.
Lower inflation does not reverse old prices
There is also a major misconception in the language: When inflation falls, that does not mean relief by any means. It merely means that prices are rising more slowly and the burden is therefore increasing less sharply. They are not falling. On the contrary: After the years of strong price increases, many higher prices remain in place. Insurance does not automatically fall back to the old level. The weekly shop does not return to the shopping trip of 2020. Tradespeople, restaurants, rents and services often retain part of the price jump in order to protect themselves against further rising prices. Statistics measure change; the household pays absolute prices.
For building wealth, this is fatal. A savings rate that remains nominally the same can lose purchasing power in real terms. 300 euros a month are no longer the same 300 euros if fixed costs and everyday costs have risen over the years. The standing order may look identical on the bank statement, but its effect is smaller. It is not enough to watch only the current inflation rate. Someone who managed well with their savings rate in 2021 may still be under pressure in 2026 despite a lower inflation rate.
Inflation rarely eats wages, but often the surplus
Inflation does not affect all expenses equally. Some costs can be postponed, others remain. Rent continues, the commute remains, and the costs of electricity, heating, internet, food and insurance do not simply disappear just because the portfolio is supposed to be funded. When these fixed costs rise and income does not rise significantly faster, the freely available part becomes smaller.
Many households do not consciously cut back their investing. They postpone it. First, the savings plan is not increased, then the emergency fund remains unchanged for longer. The planned one-off investment is delayed. At some point, building wealth is no longer paying oneself first, but becomes whatever happens to be left over after a more expensive month. Personal inflation therefore does not necessarily attack the entire income. It attacks the part that was intended for building wealth. And this part determines whether work becomes wealth over the long term.
Two households can therefore be in completely different positions with the same official inflation. One keeps investing because its fixed costs remain low. The other loses 100 euros of savings capacity every month, even though its income hardly looks worse. Both live in the same country. Only one can continue to build ownership regularly.
Pay rises do not automatically solve the problem
A pay rise helps. But it is not automatically a gain in prosperity. The first part often merely restores the loss of purchasing power. The second part disappears through taxes and social security contributions. Only what remains can create genuine additional savings capacity. Personal inflation, bracket creep and building wealth are therefore always connected. Gross income rises, prices are higher, the state reaches into the higher income, and in the end there is less room than the pay rise suggests.
Anyone who judges their savings rate only by the new salary can easily deceive themselves. What matters is not the gross increase. What matters is how much more net income remains after one’s own higher costs. Real improvement exists only when savings capacity rises in real terms. Not gross income. Not the account balance at the beginning of the month. The surplus after fixed costs, everyday life and deductions.
What follows from this in practice
Personal inflation cannot be avoided completely, but it can be made visible. Once a year, it should be clear which spending blocks determine one’s own savings rate. Housing, mobility, energy, food, insurance and family are usually more important than small consumption details.
After that, it is not about radical renunciation. It is about sequence: First, one’s own cost structure must be understood, then the savings rate can be adjusted in real terms. Anyone who continues to save 300 euros even though personal inflation has risen sharply is saving less in real terms. Anyone who lets the savings rate grow with income protects wealth building better!
