We live in a time of inflation. According to the latest consumer price index (CPI), core prices are increasing at an annual rate of 1.8 percent.
But CPI doesn’t explain your own inflation situation. Depending on where you live and your financial circumstances, you may be seeing prices increase by one percent or much, much more.
To get a better sense of your individual inflation experience, you should know your personal inflation rate. Bankrate’s Amanda Dixon has more:
If you do a quick Google search, you’ll find multiple organizations trying to help individual consumers make better use of the data provided by the CPI. One example is the Federal Reserve Bank of Atlanta’s myCPI tool.
The tool asks users a series of questions and uses information—including gender, education level, age, and income level—to provide consumers with a better idea of how prices are changing for people with similar lifestyles and spending habits. It combines data from the BLS and the Consumer Expenditures Survey.
Another helpful measure of inflation is the Everyday Price Index (EPI), which the American Institute for Economic Research started providing in 2012. The EPI includes many of the components in the CPI, but excludes fixed expenses that stem from contractual agreements, like rent and goods and services that aren’t purchased on a frequent basis, such as cars. It’s purpose: Track the changing prices of necessities that consumers routinely purchase.
“We wanted to create this measurement of what people see and feel every day,” says Robert Hughes, senior research fellow at the American Institute for Economic Research.
If your individual household expenditures are increasing, you should know by exactly how much. Only then can you change your spending habits and stay within your budget.