Personal Inflation Rates - (Not the current CPI or CPIW Rate)

[ShokWaveRider]

I thought it would be good to calculate our personal inflation rate as Retirees. We have been retired 12 years. I always believed that one's personal inflation rate does not always jive with the national rates.

I did the calculation on the last 4 months of 2021 and the first 4 of 2022, they are actual for our household.

Given we do not use much Petrol and do not buy a lot of clothes or go to work every day, we do buy staples and general living consumables.

Ours worked out to be a +3% difference so far. We have Stable Taxes and our Utilities have not changed at all. We really do not do much different. We still Blow the dough on occasions. The numbers do not include travel, but we have not done much that it makes a difference.

I will continue to do the sums for the rest of the year and see how it goes.

We live in N.E. Fla.

 

[plex]

Personal inflation has been high since two years ago, so I sort of saw this spike coming. Last year was around +10%, this year it is closer to +15% (in Texas, renting). My personal inflation is in the 3-4% range on average, so these were the largest spikes I've seen, even larger than 2006, this was part of the reason I expected a very nasty bubble pop.

 

[OldShooter]

I don't know how I would figure an overall rate but ... We are building a house and met last week with the garage door guy. He commented that garage doors had doubled in price since last year. Windows that we ordered last December just before a vendor price increase cost about 30% more than what I was quoted in April. IIRC, December was the vendor's third price increase in the year.

 

[jebmke]

I don't know how I would figure ours either since I don't track spending at detail level. I believe we would be below headline inflation levels.

A few items are fixed; Our property taxes haven't really budged in the 15 years we have owned the house. Our HO insurance premium actually went down a bit, although I think I need to check on the replacement cost they are using. Income taxes are hedged a bit since both federal and state brackets get some adjustment.

Food and energy are not large components of our spending based on my anecdotal observations. Our electric rate was up ~ 3.5% this year.

 

[Gumby]

The major personal inflation I have seen this year involves my home. After 5 years of being flat, my property tax jumped 12% this year, and my homeowner's insurance is up 15%.

As far as energy prices go, we use very little gasoline. We heat with natural gas, and all electricity in Connecticut is generated by either nuclear plants or natural gas, so it is basically the price of natural gas that affects us the most. Many years back, I purchased stock in a natural gas royalty trust. The monthly distributions more than cover our gas and electric bills, and when natural gas prices go up, so do the distributions, so we have an automatic hedge.

I've seen the prices go up at the grocery, but since we grow almost all our own vegetables it has not yet really impacted us. And we just don't buy a lot of other stuff.

 

[jkern]

It's hard to calculate personal inflation rate in a short term. I need to look at about 1 year because I need to average most of the expenses over that period due to seasonal and monthly differences. I can say that my home owners insurance just went up 45% and my rental insurance has gone up 150% in the last two years.

 

[Chuckanut]

I just ordered window blinds to replace my old window treatments. The price was almost identical to the bids I got a year ago. In fact, I think it's actually a bit lower.

What will influence my personal inflation rate over the next twelve months is taxes. We've already been warned the property taxes will see a double digit increase next year. Lucky us. The state is gearing up for its first income tax (called an excise tax on capital gains by the Guv). Lucky me.

 

[jazz4cash]

The major personal inflation I have seen this year involves my home. After 5 years of being flat, my property tax jumped 12% this year, and my homeowner's insurance is up 15%. They are my two largest budget items.

Our property tax increases get spread out over 3 yrs, so a 12% increase winds up being ~4%/yr. We appealed our last increase and won a significant reduction. My HO insurance jumped another 18% after going up 15%/ yr for the last 2. We had a claim in 2020. I shopped it but I’m still a few hundred less than the next best.

 

[ShokWaveRider]

This is starting to shape up to prove a point I have made over the years here that one's personal inflation rate is somewhat controllable. Especially for those of us who own their homes outright. Our Home and car insurance has not fluctuated that much, in fact it went down for a couple of years.

I like to think we can and do control our spend rate, when we want to that is. As mentioned, the Blow that Dough factor is anyone's guess.

I anticipate ours will be around 2 - 3% for the foreseeable future, we do not have or want a vehicle that burns more fuel than a small town or buy expensive discretionary items other than computers and such, and we always get those on sale. So, 5% return more than covers it. We currently have 50% of our stash getting ~5% till 2024. I am currently waiting for rates to catch up and will dump the other 50% in at a rate as close to that as I can get. I do not include the next 5 years of expenses in this category.

 

[jazz4cash]

Although I am too lazy to calculate, I am confident we are well below headline. Living in a HCOL area with a long low mortgage, two mouthes to feed and no burning need or desire for more stuff will do that. Thought we’d be traveling more but still not back to 100% normal.

 

[Sunset]

Too difficult to figure out, as it's not how much we spend as that varies for many reasons. I could cherry pick, but it's not representative of overall inflation, just easy things to pick like insurance, property taxes.

I think everyone's inflation is somewhat controllable. This is also an official consideration of the gov't.
example:
Eat Wagu..... too expensive.... Eat regular Beef .... too expensive....... Eat Pork....too expensive........ Eat chicken.....too expensive..... Eat Tofu......too expensive Eat DogFood

Seriously, besides the substitution adaption, there is the reduction adaption. Gas too expensive, cut down on driving by planning many trips into 1 circular trip. Set the thermostat lower to burn less fuel.

 

[youbet]

I'm enjoying all the replies. Most interesting to me are the different definitions of "personal rate of inflation."

Our situation is that because our personal rate of inflation is up (energy, food, taxes), we've been substituting, reducing, lowering, etc., to keep our spending under control. Despite our personal rate of inflation being high (what we'd spend if we continued to buy the same things in the same quantity), we've made changes (some not completely pleasant) to keep a grip on dollar outflow.

 

[W2R]

I don't know how to figure "personal inflation" in any way consistent with the other answers here.

What I *can* say, is that so far this year my spending has averaged $16/month less than during the same time last year. Plus, I am buying whatever I want.

Thoreau's attitude is one I try to emulate; specifically when he said,

"My greatest skill in life has been to want but little."
- - - Henry David Thoreau

 

[daylatedollarshort]

Our grocery costs have gone up some due to to inflation but mostly due to eating more organic foods, so that has been a voluntary increase. Home insurance went up 50% due to inflation and wildfires. Gas and electric are much higher even though our usage has gone down. Our property taxes usually never go up much due to Prop 19, our mortgage is fixed and we stopped driving much during the pandemic so our gas costs are half of what they were, despite the cost increase. We don't buy a lot of clothes and what we do get is usually from Costco or Amazon so clothes aren't a big budget item for us.

Restaurant prices are generally up but but I've been finding some good week day specials and Groupons, keeping our dining out costs reasonable. There are still great deals on plays and concerts here though less of a selection since the pandemic started. Some of our favorite theater groups have either gone out of business or are still on hiatus.

For this year's cost cutters, I've been looking at what hikes and events we can get to using the deeply discounted senior fares on trains and ferries instead of driving. I joined a new seat filler group for free event tickets. We plan to do more activities with the senior centers since those are free and generally healthy things to do, like playing badminton and board games. Other projects are trying out solar cooking, changing cell phone plans, solar dehydrating, reducing food waste, doing more batch cooking, expanding my herb garden, getting back into the credit card travel points games, and a bunch more.

 

[ShokWaveRider]

I don't know how to figure "personal inflation" in any way consistent with the other answers here.

What I *can* say, is that so far this year my spending has averaged $16/month less than during the same time last year. Plus, I am buying whatever I want.

Thoreau's attitude is one I try to emulate; specifically when he said,

"My greatest skill in life has been to want but little."
- - - Henry David Thoreau

I just took our last 4 months expenses of 2021 divided it by 4 and compared them with the first 4 months of 2022 divided by 4. The difference is used to calculate the percentage of the last 4 of 2021.

I.E. Difference divided (/) by (Last 4 Months of 2021 / 4) x 100.

 

[dmpi]

Biggest driver to my peronal inflation has been taxes. Namely property taxes. Its gone up 25% in two years. Gas price also hits us. Internet & Phone & utilities have gone up. Food prices have been minimal for us. We just shop at Walmart and tend to eat the cheaper food. Restaurant food has gone up quite a bit. I'm too lazy to compute it but I doubt if my overall rate is even above 5%.

 

[Sunset]

I just took our last 4 months expenses of 2021 divided it by 4 and compared them with the first 4 months of 2022 divided by 4. The difference is used to calculate the percentage of the last 4 of 2021.

I.E. Difference divided (/) by (Last 4 Months of 2021 / 4) x 100.

That's spending not inflation,
unless you bought exactly the same things and amounts. Exactly the same kwh of electricity, cubic feet of water, 1lbs of hamburger, gallons of milk, etc...

 

[GenXguy]

No, I can't control my inflation because I've already been living frugally and don't have anywhere I can cut back that makes any measurable difference at this point. I made substitutions for lower cost products years ago, so I can't make them again. I don't use much gas. I already don't travel and almost never eat out. So, I'm stuck having to pay higher prices for the same amount of goods. I can't control that. If you were wasting a lot of money to begin with, then you have some control, but don't assume that of all of us.

What makes it worse for me is that my homeowner's insurance is up 27% over 2 years. And home repairs / maintenance that's been needing done is up far more than that, which is a significant part of my budget in the coming years to get things done on the home. My personal inflation is very high when factoring all that in, but I don't have an exact figure on it, and it will vary a lot based on the home maintenance costs and when I actually do it, since it won't be all within a single year. Excluding home maintenance, I'm probably seeing closer to 15%-20% inflation, but higher than that after home maintenance is included compared to what the estimated cost of that maintenance was prior to the pandemic.

 

[GTFan]

Biggest driver to my peronal inflation has been taxes. Namely property taxes. Its gone up 25% in two years. Gas price also hits us. Internet & Phone & utilities have gone up. Food prices have been minimal for us. We just shop at Walmart and tend to eat the cheaper food. Restaurant food has gone up quite a bit. I'm too lazy to compute it but I doubt if my overall rate is even above 5%.

Agree on property taxes and I'm dreading the 2022 assessment that will come any time now (it's going to go up a few hundred given the insane value inflation here).

But on groceries, I already do a lot of shopping at Aldi and it's the cheapest you can get. I have seen a LOT of stuff I buy go up in price since the first of the year, easily 10% or more higher prices on a broad range of groceries. And if it goes up at Aldi, it's going up everywhere. Simple stuff like a can of mushrooms that used to cost 68c now costs 92c. I shop there every week and buy a lot of the same staples, I've seen it.

Yes, you can still cherry pick sales and I do that all the time, but I've noticed that the sale prices or BOGOs at Kroger and Publix are also higher across the board. There's no getting around food inflation here, it's real. Don't care how you try to sub out, you're paying more for almost everything.

 

[enjoyinglife102]

One's personal inflation rate is the only one that matters and it is impossible to calculate. I track overall spending in broad categories and make any adjustments from there based on that result and overall portfolio performance. I also ignore the government's reported inflation rate as the only thing I'm sure about the accuracy of that number is that in no way does it apply to me, or anyone else for that matter. From my old finance days, it's basically a plug number. However it's never replaced with something that's closer to being accurate, which would be the aforementioned impossible to calculate personal inflation rate.

 

[USGrant1962]

Well for a really personal inflation anecdote - I just bought Gatorade to mix with Miralax in prep for you know what procedure tomorrow. The instructions say mix with a 32 ounce bottle of sports drink. Guess what? They don't make 32 ounce bottles any more...they are all 28 oz. So there's 14% inflation for me.

 

[John Galt III]

I try to minimize my pain by thinking about it 'big picture'. Outside forces cause this stuff every so often. Just have to adjust, and keep living, keep forging ahead positively.

 

[Koolau]

For a while, I thought we could just engineer around inflation (substitution, putting off purchase, etc.) Eventually, you realize you are trapped. Buying airline tickets sort of cemented that for me. Traveling when we really wanted to was almost 50% higher than last year, so we changed days and got it down to about 15% more than last year. Canned goods were running out, so sticker shock hit me when replenishing. All the staples are higher - much higher. We always buy stuff to take to the kids (mac nut candies, Kona coffee, etc.) and prices have exploded. Obviously, your mix of purchases is a big factor in personal inflation. We've never bought "high quality" foods or appliances, etc. But now "cheap stuff" is becoming expensive.

We are hearing of incredibly inflated prices of l@bor (handyman to contractor w*rk) from folks we know. We have some stuff needing done and fear what the prices will be - if we can find anyone to do the w*rk. I think we're in for a bumpy ride for a few years but YMMV.

 

[brett]

No idea. Prices are up. We only track by total after tax spend on an annual basis.

Food is definitely up. Gas is up, up up.

Our monthly cel/internet/cable rates are down by 37 percent w/enhanced services through vendor re-negotiation. $800 less per year.

Found out this morning that our June home insurance renewal is down by four percent.

We have had below average inflation over the past ten years and above average equity growth. The recent inflation was not unexpected given the past two covid years.

On the plus side we have had below average inflation and above average equity returns over the past ten years.

Government inflation rates are completely meaningless to us.

 

[Sojourner]

Buying airline tickets sort of cemented that for me. Traveling when we really wanted to was almost 50% higher than last year, so we changed days and got it down to about 15% more than last year.

+1

Travel costs—specifically, air fares—are absurdly higher than last year. I'm looking at paying about double for cross-country airfare for next month compared to the exact same itinerary just three months ago. Basic (coach/main cabin), roundtrip flights from ATL to the San Francisco area are nearly $1,000! That's about what I paid for a roundtrip ticket to the UAE last year! Mind boggling.