To judge by government data,
there’s essentially no inflation in the U.S. economy. The latest
Consumer Price Index actually shows a 0.2 percent drop in prices from April 2014.
Just
try telling that to millions of renters who have seen their monthly
rent checks rise 3.5 percent, on average, over the past year. Families
shouldering college tuition payments or child care expenses, up 3.7
percent from last year, will also find the notion of an inflation-free
economy hard to accept. The official inflation rate—the number Federal
Reserve Chair Janet Yellen is watching closely as she decides when to
start raising interest rates—may bear little resemblance to the one
experienced in everyday life, and the way inflation feels to any
individual varies widely, based on demographics.
A new tool created by researchers at the Atlanta Federal Reserve Bank lets users estimate their own personal inflation rate. MyCPI builds
a customized inflation rate, based on responses to a handful
of questions: age, income, education, marital status, homeownership. The
result is based on the CPI and government surveys of consumer spending.
Some
of the worst inflation is hitting single women over 55 who rent their
homes, make less than $30,000 a year, and aren’t college-educated.
Overall prices have climbed 1.3 percent from last year. Single men under
35 who own homes, didn't go beyond high school, and earn from $30,000
to $70,000 are actually experiencing deflation: Overall prices dropped
1.2 percent from a year ago.
The variation can be explained by
how the different groups spend money. The chart below shows how much
each group—let’s call the women “Linda” and the men “Mike" — spends on
common categories, along with how much an average person spends.
Mike
spends three times more on transportation than Linda, and Linda spends
50 percent more on housing. These sorts of differences matter because
the prices of different products can rise or fall at
dramatically varying rates. Transportation costs are down 9.8 percent
from a year ago, driven by the cheaper price of gasoline. That helps
almost every American who owns a car, and it particularly helps young
families that tend to drive more.
The Atlanta Fed’s tool is useful for letting you know what sort of inflation people like you are feeling. Users can sign up for monthly updates as new CPI data come out, and the Fed plans to add further data and graphics to the tool. But MyCPI
is unlikely to capture your experience if you have unique spending
habits. "If they’re living off the grid in a yurt and driving an
electric car," says the Fed’s Brent Meyer, "I’m not going to pick them
up."
