Personal inflation calculator: what is your inflation rate?

SOURCES

This calculator currently includes data for the UK, US and Japan using the following sources:

  1. UK Office for National Statistics

  2. US Bureau of Labor Statistics

  3. Japan Bureau of Statistics

METHODOLOGY

What measures of inflation does the calculator use?

There are a few variations of the CPI. We used the following measures for each country:

  • UK: CPIH, which is CPI plus imputed rental costs for landlords

  • United States: CPI-U (unadjusted), which measures price changes for all urban consumers (about 93% of the total US population) and includes imputed rental costs for homeowners

  • Japan: CPI, which is CPI plus imputed rental costs for owners

Should I enter irregular purchases, such as flights or devices?

We recommend that you only use the inflation calculator for your regular monthly expenses, as the inflation you experience for one-time purchases will depend on when you make the purchase. This approach is best for understanding your personal inflation trend, which is the inflation rate you’ve experienced for that same monthly basket in previous months. This approach, however, is less comparable to the national inflation rate, as it excludes irregular purchases.

However, you can choose to use the calculator to find out your personal inflation rate in the following alternative ways:

  1. Actual spending for the last month, including any irregular purchases. With this approach, you can enter all your actual expenses in each category, including irregular purchases if you paid for them last month. This approach is the best for understanding the impact that inflation is currently having on your personal finances. Your personal inflation trend is the rate of inflation you would have experienced for making the exact same purchases as last month in previous months.

  2. The average monthly values ​​of all your expenses. With this approach, you can include both your regular monthly expenses and an average “cost per month of use” for any irregular purchases. This approach is best for comparing your personal inflation rate with the national inflation rate, but it does not necessarily reflect the inflation you will have experienced from an irregular purchase.

How do I enter my accommodation costs if I am a landlord?

For the purposes of this calculator, you can enter the amount you spend on mortgage payments and home insurance in “Rent/Mortgage” and the amount you spend on home repairs and improvements in “Household goods and maintenance”. Taken together, they act as a proxy for owner-occupied housing costs.

How inflation rates are measured for homeowners is a bit complicated, since buying a property is considered both an investment and a service. As a result, it is sometimes treated differently in consumer price indices.

We have chosen CPI measures for this calculator that take into account the servicing costs of homeownership for homeowners through a method known as “rental equivalency”. This uses the rent a landlord would be expected to pay for the property they live in as a proxy for the housing services they provide.

Are all expenditure items included in consumer price indices?

No, spending on the following products is generally considered outside the scope of consumer price indices: investments; cash gifts, including donations and tips; gambling; credit charges; loan interest payments; and taxes not associated with consumer goods and services.

Does the inflation calculator take into account price variations of different items?

No, this calculator does not reflect:

  • Where in your country you purchase a product. For example, housing cost inflation is based on a national average, rather than price changes in your area.

How are national inflation rates calculated?

Although there are some variations between countries, the following steps are generally followed to calculate national inflation rates:

  1. Each month, price collectors record prices for the same set of products and from a large sample of stores across the country and online.

  2. Price changes for specific products at specific stores are aggregated into an overall price change for each item type and indexed to represent the relative price change for that item type over time.

  3. Items are then weighted to ensure they reflect their relative importance in the overall shopping basket. The weights are generally based on average household spending and are updated periodically (every one to two years) to reflect changes in consumer behavior.

  4. The overall consumer price index is calculated from a weighted average of price variations.

How is my personal inflation rate estimated?

Your personal inflation rate is calculated similarly to the national inflation rate, but has necessarily been simplified as follows:

  1. First, the calculator collects and calculates the latest 12-month historical price index data for each expenditure category from the relevant national statistical authority of the country you have selected.

  2. The calculator then sets the weight it should apply to each category’s price inflation based on the expense inputs you provide.

  3. Then the calculator mimics the calculation made by the national statistics authority to produce an overall personal inflation rate for each month from January 2021 until the last month for which we have data. In doing so, the calculator assumes that the share of your expenses in each category remains the same each month.

Please note that the personal inflation rate figure we produce may include a rounding error, as we use published figures which have been rounded by the national statistics authority.

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