Inflation eased slightly in April to an annual rate of 8.3 percent, down from an annual rate of 8.5 percent in March, according to data released Wednesday by the Bureau of Labor Statistics. The Consumer Price Index dropped for the first time in eight months.
Inflation remains near a 40-year high and is widespread, but how you experience particular price increases depends on your spending patterns. You may live in a city and rarely drive, so high gas prices aren’t a concern. You may be a vegetarian and not affected by higher meat costs. On the other hand, your rent has skyrocketed, your kid’s tuition just jumped by double digits and you’re planning a trip overseas. Prices for food, airline tickets, rent and hundreds of other goods and services factor into the Consumer Price Index, and some of them weigh more heavily than others. But it’s a broad measure and might not reflect what’s happening in your budget.
Calculating your personal inflation rate will give you a much better idea of how hard you’re actually being hit by rising prices — and where. You’ll also get a good look at how your spending has changed, and where your money has been going.
Begin with the big expenses. Grab your credit card bills, bank statements and the list of the categories used by the BLS. They include food, housing, entertainment, transportation, apparel, education and many more. You can find a detailed list here. Be sure to keep your expenses uniform across the months, so you’re comparing apples to apples. And if you pay certain bills quarterly or annually, convert them to monthly.
To calculate your personal inflation rate for April, for instance, total your monthly expenses for April 2021. Do the same for 2022. Determine the difference and divide it by your monthly expenses for April 2021.
For example, if you spent $5300 in April 2022 and $5050 in April 2021, your personal inflation rate (250 divided by 5050) is 4.9 percent.
If you want to bring it down, you’ll know where to start.
Source: | This article originally belongs to Nbcnews.com
