Thursday 15 March 2012

Calculating Personal Inflation by ignoring the government basket-case…

Those of you munching pineapples while awaiting tomorrow’s delivery of your iPad3, and freeing up the necessary 50% of waking hours by sacrificing high-level DIY projects via the postponement of the purchase of a new ladder, may find that government measures of inflation will in future provide a more accurate reflection of your version of the rising cost of living.
However, if you are like the remaining 99% of the population, an alternative approach may be necessary…
The monthly inflation figure is essential in gauging how the nation is doing but it’s largely irrelevant and different to individuals.
That’s because the basket of goods the Office of National Statistics measures to monitor prices is a general one.
Simon Read in the Independent offers a simple way to calculate how inflation is hitting your finances:
-       Take a bank statement from a year ago and compare it to today.
-       Look at the things you have to spend on every month – travel costs, energy bills, phone, broadband, food, etc 
-       Add up how much you spent then and how much now
-       Work out the difference as a percentage of last year’s figure
This will give you a rough idea of how much inflation really is ravaging your finances.
Your bank manager will supply the decimal points…

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