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YOUR PERSONAL INFLATION RATE

Hand putting wooden cube and inflation word a on coins in idea for FED consider interest rate hike, world economics, and inflation control, US dollar inflation

In 2022, inflation hit levels not seen in more than 41 years. Although the Federal Reserve has tightened its monetary policy to help manage inflation, many people are still concerned about what may lie ahead.1

To see how inflation is affecting you, calculating your personal rate can be helpful. Making inflation more personal might help you get a better understanding of higher prices.

Year-over-Year Approach

One approach is to compare your own budget line items, like groceries and gas, to calculate your own inflation rate. For example, say in March 2022, you estimated that you spent $500 a month on groceries. This year, you anticipate spending $600 for the month. Your personal inflation rate for groceries would be 20% ($600 minus $500, divided by $500).

While the budget item approach can provide insights, some may find it a bit limiting. If you see a big number like 20%, it may cause you to overreact and consider lifestyle changes that may not be necessary.

Comparing Your Spending

Another approach is to look at all of your spending categories and make some estimates. The accompanying table breaks total spending into six categories, and shows the 2022 inflation rate for each and the average amount all Americans spend in each category.

Estimating Your Inflation Rate

The Consumer Price Index rose 6.5 percent in 2022. To calculate your personal inflation rate, make estimates for the categories and list them in column C. Make certain that the estimates in column C add up to 100%. Then, multiply the numbers in Column A by the numbers in column C and put your answer in column D. Finally, add up all the numbers in column D.

 

A

B

C

D

Category

2022 Inflation rate factor

National spending average, by category. Use these numbers as a reference

Your percentage spending for each category. Make certain it adds up to 100%

Your personal inflation rate, by category

Food & Beverages

0.1

15%

  

Housing

0.05

37%

  

Energy & Transportation

0.09

20%

  

Medical Care

0.04

9%

  

Recreation

0.04

6%

  

Other, including Apparel & Education

0.06

13%

  
  

100%

100%

Total_____%

Disclosure: The Bureau of Labor Statistics (BLS) divides expenditures into eight major groups. For simplicity, the eight groups are consolidated into six in the table, and an inflation estimate is applied for
each category based on BLS figures.

Sources:  Bureau of Labor Statistics, January 12, 2023; Pew Research Center, January 2022.

Inflation hits each of us in different ways, and our experiences can be very different and may need to be reviewed closely. If you want to take a more in-depth look at your inflation rate, or share your results from our calculator, we look forward to hearing from you.

1. BLS.gov, June 2022

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