Personal Inflation Calculator: What is your inflation rate?

Sources

This calculator currently includes data for the United Kingdom, United States, and Japan using the following sources:

  1. UK Office for National Statistics

  2. US Bureau of Labor Statistics

  3. Japan Statistics Bureau

methodology

What inflation measures does the calculator use?

There are some differences in the CPI. We used the following procedures for each country:

  • United Kingdom: CPIH, which is the consumer price index plus rent costs calculated for homeowners

  • US: CPI-U (not seasonally adjusted), which measures price changes for all urban consumers (about 93 percent of the total US population) and includes homeowners’ calculated rental costs

  • Japan: CPI, which is the consumer price index plus rent costs calculated for homeowners

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

We recommend using the inflation calculator just for your regular monthly spending, because the inflation you experience for one-time purchases will depend on when the purchase was made. This approach is best for understanding your personal inflation trend, which is the rate of inflation you have experienced for the same monthly basket in the previous months. However, this approach is less comparable with the national inflation rate, because it excludes irregular purchases.

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

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

  2. Average monthly values ​​of all your spending. With this approach, you can include both regular monthly spending and the average “monthly cost 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 experience when making an irregular purchase.

How do I enter my housing costs if I am a homeowner?

For the purposes of this calculator, you can enter the amount you spend on mortgage payments and home insurance in ‘Rental/Mortgage’ and the amount you spend on repairs and home improvements in ‘Home Appliances & Maintenance’. Combined, they act as a proxy for the owners’ housing costs.

The way inflation rates for occupants of landlords are measured is a bit complicated, as buying a property is both an investment and a service. As a result, they are sometimes treated differently in CPIs.

We chose CPI metrics for this calculator that takes into account home ownership service costs for homeowners through a method known as the “rent equation.” This rent that the landlord has to pay for the property he lives in is used as a substitute for the housing services he provides.

Are all expenditure items included in consumer price indices?

No, spending on the following products is generally considered to be outside the scope of CPI: investments; monetary gifts, including donations and gratuities; gambling. credit fees; interest payments on loans; and taxes not related to consumer goods and services.

Does the inflation calculator take into account price changes for different items?

No, this calculator does not reflect:

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

How are national inflation rates calculated?

While there is some variation between countries, the following steps are usually taken to calculate national inflation rates:

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

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

  3. The items are then weighted to ensure that they reflect their relative importance in the overall shopping cart. The weights are usually based on average household spending and are updated periodically (every one to two years) to reflect changes in consumer behaviour.

  4. The total CPI is calculated by a weighted average of price changes.

How is my personal inflation rate estimated?

Your personal inflation rate is calculated in a similar way to the national inflation rate, but necessarily simplified as follows:

  1. First, the calculator collects and calculates the most recent 12-month price index data for each spending category from the relevant national statistical authority in the country you selected.

  2. The calculator then determines the weight it should apply to price inflation for each category based on the spending inputs you provide.

  3. Next, the calculator simulates 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. When you do this, the calculator assumes that your spending share for each category remains the same every month.

Please note that the personal inflation rate figure we produce may include a rounding error, because we use published figures that have been rounded up by the National Statistics Authority.

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