Going to the grocery store, market or bakery in Germany is a part of daily the daily living (unless it's Sunday when everything is closed). Don't worry, your eyes are not deceiving you! When purchasing your bread, water, potatoes, butter, toilet paper, etc., you'll notice that the total at the register is exactly the same as the price marked on the items you're purchasing. There is still tax, but the tax (which is actually higher than U.S. tax) is included in the price unlike in the U.S. where tax is added additionally to the price that's marked. Also notable, the price of food here (even with the higher tax) is exceptionally low. Many items like milk, bread, bottled water and other essentials cost less than a U.S. Dollar in total. The price of almost all food bought in the grocery store here is either comparable, or even much less than the cost of food purchased in the United States. The little, local fast food places are also much cheaper. However, the nicer restaurants are either comparable, or even costlier and it's good to be aware that water is not included for free with your meal. But, occasionally a shot of liquor is offered complementary after your finished.
The rumor in America is true: Depending on their brands, it is possible to find beer that's much cheaper than water!