Inflation jumped by 9.1% in June, the fastest since 1981. How does your ‘personal inflation rate’ compare?

In June, the Bureau of Labor Statistics reported that inflation hit a 40-year high. This year, the prices Americans pay at the gas pump, grocery store and other places have been rising more quickly than normal.

How much have my household costs gone up, and how does that compare to the average American?

Your personal inflation rate can be used to answer these questions.

The consumer price index is a measure of inflation. In June 2022, households paid 9% more money for a broad basket of goods and services compared to the same basket in June 2021.

If you don't drive, you're getting stung by higher gas prices.

Your basket may be different. Brian Bethune, an economist and professor at Boston College, said that purchases and consumption habits vary from household to household, based on factors such as age and income.

Your personal inflation rate may be different from the average.

You can calculate your inflation rate using a number of methods. The pitfalls of such a calculation came into focus earlier this month when Haley, a former U.S. ambassador to the United Nations, accidentally posted an incorrect estimate for a July 4 cookout.

A barbecue is 67.2% more expensive than it was last year, according to her post. The American Farm Bureau Federation said costs had increased by only a small amount. The White House said costs for an Independence Day BBQ had decreased 16 cents compared to 2020.

The easiest way to get a rough estimate of your inflation rate is to use this method.

1. The first step is to determine how much of your spending falls into certain categories or buckets, such as food, energy, clothing, housing and entertainment.
   
   
   
   To do this, you’ll need to consult your bank and credit card statements for the past year to find exact spending amounts. The U.S. Bureau of Labor Statistics publishes a detailed list that can help you itemize your purchases by category.
2. Calculate your category “weights.” This weighting is basically the share of your spending devoted to specific buckets. (The consumer price index calls this weighting “relative importance.”)
   
   
   
   To do this, tally your total spending within categories. Divide each number by your aggregate annual spending to calculate the category weight.
   
   
   
   For example, let’s say my total household spending from June 2021 to June 2022 was $50,000. I spent $17,000 (or 34% of the total) on rent and $6,000 (or 12%) on groceries. Their category weights would be 0.34 and 0.12, respectively.
3. Reference the BLS table of detailed expenditure categories again. The “unadjusted percent change” column shows the average annual percent increase in price for each item.
   
   
   
   For example, rent payments increased 5.7% in the year through June. The price of food at home (groceries) rose 12.2% in the same period.
4. Multiply the category weights in step 2 by the annual percent change for those categories in step 3. Using the above example, you’d multiply 0.34 x 5.7 for the rent calculation. Multiply 0.12 x 12.2 for food. And so on for all other spending categories.
5. To determine your personal inflation rate, add up the category totals from step 4. (In the above example: 1.938 + 1.464 + etc.) This total is your annual inflation rate expressed as a percentage.
6. Compare your rate to the national average. For annual spending through this June, a percentage that’s lower than 9.1% means your costs haven’t increased as much as the average American.
   
   
   
   A higher number means your costs have risen more in the past year. Of course, households generally think in terms of dollars and cents, not percentages.

Your household experience is compared to the average American's based on the differences in goods and services and the quantity that each household buys. The formula uses price averages for the goods and services.

Consumers can do more calculations to understand how their household spending has changed over time.

1. Tally all expenses from your bank and credit card statements in the past 12 months, as well as for the prior 12-month period.
2. Subtract the totals and divide by the first year’s spending. For example, let’s say my spending was $50,000 from June 2021 to June 2022, and it was $45,000 from June 2020 to June 2021. Divide the difference ($5,000) by $45,000.
3. Multiply that number from step 2 by 100 to determine your personal annual inflation rate.

I would add 0.111 to 100 for a total of 100. The annual inflation rate I would have had would have been 11.1%.

There are a few things to keep in mind. You won't be able to account for spending in cash. It is possible that you have sought out less expensive alternatives, such as substituting less expensive foods, or driving less to save on gasoline.

Your calculation might not be perfect, but it will be in the ballpark.

Costs aren't going down in a vacuum. It is likely that your income has increased as well. The Federal Reserve Bank of Atlanta says average wages have gone up in the last year. The average inflation rate has not kept pace with household income.

Alex Arnon, associate director of policy analysis for the Penn Wharton Budget Model, said of inflation's impact, "If you have to shell out more dollars just to get the same items and your income isn't keeping up with that, then your quality of life is getting worse."