What is Foolsaurus?

It's a glossary of investing terms edited and maintained by our analysts, writers and YOU, our Foolish community. Get Started Now!


Personal Inflation Rate

A personal inflation rate is targeted to your specific spending habits and your location.

Contents

Expanded Definition

The Bureau of Labor Statistics reports the Consumer Price Index (CPI) each month. The CPI is a national average of the amount of inflation consumers are experiencing. The CPI uses a standard "basket of goods" over time to establish a baseline for measuring inflation. The pricing data used to measure changes is a composition of prices accumulated throughout the country and is also a national average. The result of the calculation provides the theoretic inflation rate of the "average" consumer.

A personal inflation rate takes your own spending patterns into account and uses the prices available for those items that are closest to your locality. This method of calculating your own inflation rate is more relevant than the CPI to you personally. Knowing this rate can help you plan better for future expenditures and for your retirement.

A web site to calculate your own personal inflation rate is http://myinflationrate.com

Related Fool Articles

Related Terms

Inflation
Consumer Price Index
Deflation

Related Fool Discussion Boards

Recent Mentions on Fool.com

Advertisement