Inflation
A general rise in prices that makes money lose purchasing power. The ECB aims for 2% a year over the medium term for the euro area.
Alsorising pricescurrency debasementinflation rateloss of purchasing powerHICPconsumer price index
On the learning path: Stage 2 · Step 1 – Money, inflation & trust
Inflation means goods and services become more expensive on average, so the same amount of money buys less. It is measured with a basket of goods – in the euro area with the Harmonised Index of Consumer Prices (HICP), in Germany additionally with the national consumer price index (VPI).
Target and figures
The European Central Bank aims for 2% over the medium term; it regards inflation that is too low as just as undesirable as inflation that is too high.[1] In Germany, the rate was 2.9% in August 2026;[2] Destatis, Germany’s Federal Statistical Office, publishes new figures every month.
Even 2% adds up: after ten years, money has lost around 18% of its purchasing power, and after about 35 years, half (our own calculation).
Bitcoin and inflation
Supporters see bitcoin as protection against currency debasement, because its supply is capped at just under 21 millionGlossary21 million (Bitcoin’s supply cap)Under the network’s rules, there will never be more than just under 21 million bitcoin. The cap follows from the issuance schedule: new bitcoin per block halve every 210,000 blocks until none are created, around 2140.On the learning path: Stage 2 · Step 2 – Halving & 21 million →In the glossary →. In the short term, that hasn’t held up: euro-area inflation peaked at 10.6% in October 2022.[3] Over the same period, bitcoin fell from around $67,600 (8 November 2021) to around $15,800 (21 November 2022), shortly after the collapse of FTX (daily closing prices).[4]
Why more money doesn’t automatically mean higher prices or a higher bitcoin price is explained in Money, inflation & trust.
Related terms
These terms are closely connected.
- This termInflation
- Fiat moneyMoney that isn’t backed by gold or other physical assets but rests on government decree and trust – such as the euro and the US dollar. Most of it is created by commercial banks, for example through loans.
- Store of valueOne of the three classic functions of money: it should keep its value over time so that you can save today and spend later. Whether bitcoin fulfils this role is disputed.
- 21 million (Bitcoin’s supply cap)Under the network’s rules, there will never be more than just under 21 million bitcoin. The cap follows from the issuance schedule: new bitcoin per block halve every 210,000 blocks until none are created, around 2140.
- Digital euroA planned digital form of euro cash, issued by the European Central Bank. A pilot is planned for 2027 and a first issuance is possible in 2029 – if the EU adopts the law in 2026 (as of September 2026).
- VolatilityA measure of how strongly a price fluctuates, usually given as annualised standard deviation in per cent. Bitcoin fluctuates much more than a broad stock index or gold – up and down.
Explained in depth
These articles go into more detail:
- Stage 2 · Step 1Money, inflation & trustWhat money has to do, how it is created and why inflation erodes your purchasing power – with ECB and Destatis figures and an honest look at Bitcoin.
- Deep dive · Stage 2Digital scarcityWhy Bitcoin is considered scarce, how it compares with gold and why scarcity alone delivers neither a safe store of value nor a price forecast.
- Deep dive · Stage 3Saving & preserving valuePreserving purchasing power with Bitcoin? Which money it may suit, what historical savings plans show and why emergency funds and fixed-date goals don’t belong in it.
More from „Money & economics“
Sources4 sources · 3 publishers
The superscript numbers in the text refer to these sources.
- Monetary policy strategy – European Central Bank (accessed 28/09/2026)
- Inflationsrate im August 2026 bei +2,9 % (Pressemitteilung Nr. 320) – Statistisches Bundesamt (Destatis, Germany’s Federal Statistical Office), 10.09.2026 (accessed 28/09/2026)
- The dynamics of inflation differentials in the euro area (Economic Bulletin 5/2024, Box) – European Central Bank, 01.08.2024 (accessed 28/09/2026)
- Historical Bitcoin prices (API) – mempool.space (accessed 28/09/2026)
This entry is for education only and is not investment, tax or legal advice.