Your Personal Inflation Rate — What Inflation Actually Costs You
Example: Rent or mortgage payment: 2000 $/mo · Home energy — electricity, gas, heating: 250 $/mo · Fuel for your vehicle: 400 $/mo · Food — groceries and eating out: 700 $/mo · Medical care — premiums, prescriptions, visits: 150 $/mo · Everything else: 900 $/mo · Your gross annual income (for the raise calculation): 85000 $/yr
| Your personal inflation rate | 5.90% |
| Gap vs the 3.5% headline rate | 2.40% |
| What is driving it | Fuel — your commute is the single biggest driver |
| Extra cost this year at your rate | $3,113 |
| Raise needed just to stand still | 3.70% |
| Total monthly spending measured | $4,400 |
| ⚡ Halve your fuel use → rate falls by | 1.10% |
| ⚡ Fixed-rate energy plan → rate falls by | 0.70% |
| ⚡ Fixed-rate mortgage (housing stops inflating) → rate falls by | 1.50% |
Worked example
Take two people in the same city, in the same month, on the same $85,000 salary. The first drives 80 miles a day and spends $4,400 a month: $2,000 housing, $250 home energy, $400 fuel, $700 food, $150 medical, $900 everything else. Weighting each category by its real published rate gives a personal inflation rate of 5.9% — a full 2.4 points above the 3.5% headline. The driver is unambiguous: fuel is only 9% of the budget but it is running at 26.7%, so it alone accounts for most of the gap. At that rate the same basket costs about $3,113 more over a year, and a 3.7% raise only breaks even. The second person works from home and spends $3,970 — same rent, same food, same everything, but $40 of fuel instead of $400 and slightly lower home energy. Their rate is 3.8%, barely above headline, and their annual damage is $1,828 against a 2.2% break-even raise. Same city, same month, same headline number in the news, and the commuter needs nearly twice the raise just to stand still. Now look at the Lever Board for the commuter: halving fuel use pulls the rate down 1.1 points, a fixed-rate energy plan 0.7, and a fixed-rate mortgage 1.5 — the largest single lever, because housing is the biggest slice of the basket and a fixed payment does not inflate at all. That last one is worth noticing: the most powerful inflation hedge most households own is not an investment, it is a fixed-rate mortgage.
Frequently asked questions
Why is my personal rate different from the number on the news?
Because the headline Consumer Price Index weights every category by what the average urban household buys, and you are not average. The CPI basket assumes a fixed share of spending on fuel, housing, food and medical care. If you drive far more than average, your fuel share is much larger than the basket assumes, so a 26.7% fuel increase hits you far harder than it hits the index. The same logic works in reverse: if you have a fixed-rate mortgage, the largest single item in most baskets is not inflating for you at all.
Where do the category rates come from?
Every rate is the published year-over-year change from the U.S. Bureau of Labor Statistics Consumer Price Index release (June 2026 data, released 14 July 2026). Housing uses the shelter index, fuel uses the gasoline index, home energy uses the energy index, and "everything else" uses core CPI, which excludes food and energy. Nothing here is estimated or modelled — the arithmetic is a weighted average of official figures, and the AI explanation on this page narrates those numbers rather than producing any of its own.
How often does this need updating?
The BLS publishes CPI monthly, usually in the second week of the following month. The rates on this page carry an as-of date so you can see exactly how current they are. Category rates can move sharply month to month — energy in particular fell 5.7% in a single month while still being up 15.7% over the year — so a rate that is several months old may describe a different environment than the one you are in.
What counts as "everything else"?
Clothing, household goods, recreation, education, communication, personal care, insurance other than medical, and anything else not captured by the five named categories. It is priced at core CPI, which is the closest published proxy for a broad non-food non-energy basket. If one of your largest expenses is something unusual and fast-inflating, this tool will understate your true rate — the categories are the ones the BLS publishes, not a complete list of everything money is spent on.
Why does the tool ask for my income?
To answer the question that actually matters: what raise do you need just to stand still. Inflation applies to your spending, but a raise applies to your income, and those are different numbers. Someone spending $4,400 a month on an $85,000 salary needs roughly a 3.7% raise to cover a 5.9% personal inflation rate, because they do not spend every dollar they earn. Anyone spending a higher share of their income needs a proportionally larger raise, which is why the same inflation rate is much harder on lower earners.
Should I use this number in my retirement plan?
It is a better starting point than a generic assumption, with one caveat. Every retirement projection contains an inflation assumption, usually a default of 2.5% or 3%, and if your real rate is persistently higher then your retirement target is too low. But spending patterns change across a life: commuting costs typically fall at retirement while medical costs typically rise, so the rate you are living now is not necessarily the rate you will live later. Use it to sanity-check whether the default assumption is plausible for you, not as a fixed input for the next forty years.
Does a fixed-rate mortgage really protect against inflation?
For the housing portion of your budget, yes, and it is usually the single largest lever on this page. A fixed mortgage payment does not rise with the shelter index, so the biggest item in most household baskets stops inflating entirely — while your income, in most cases, continues to rise with inflation over time. That is why the Lever Board frequently shows the fixed-mortgage lever as the largest of the three. It does not protect property taxes, insurance or maintenance, all of which do continue to rise.