Inflation fell slightly in April, but is still close to a 40-year high, with consumer prices rising 8.3% year on year. Rising spending on housing, food, airline tickets and new cars has contributed most to this key inflation rate.
According to Moody’s Analytics chief economist Mark Zandi, a typical American family spends about $ 450 more on goods and services than a year ago. However, you can’t be “typical”. We don’t all spend the same amount on the same things.
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To find out how much inflation actually affects your wallet depends on how much you spend and where you spend it. You need to calculate your personal inflation rate. Here’s how to do it:
- Look at what you have spent on food, shelter, gas, entertainment, clothing, education and other items. (To find out exactly what to include, go to here to the list of expenses of the U.S. Bureau of Labor Statistics, which make up the consumer price index.)
- Collect credit card bills and bank statements to find the exact amounts you spent in each category.
- Add up the monthly expenses for the past month and year ago.
- Then subtract the total costs for April 2021 from April 2022.
- Divide this difference by your monthly expenses for April 2021.
- The result of this equation is your personal inflation rate.
Depending on your income, the impact of your personal inflation rate may feel better – or worse – on your wallet than the latest CPI figure.
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