I track my expenditure accurately. Over the last 13 years, the rise in my cost of living has been zero. This is for true, like for like tracked expenditure. CPI has risen around 38% in that time. My view is that CPI is hopelessly flawed in its methodology. Any other views? Is there anyone else that tracks and find their expenditure matches CPI?

This seriously affects my personal finance (which is why it very much is ON topic...) For example, in order to budget I need to put in a value for inflation. I have, in the past, used the central bank target for this- only to find it does not apply to me (in the same way that CPI does not.) I am searching for why this error occurs, hence this question.

  • 1
    Is this intended as being specific to one country or a general question about inflation measures worldwide? – GS - Apologise to Monica Dec 17 '17 at 17:10
  • 2
    Could you show a source for your 80% figure? Pretty confident that's wrong. Here's a 10-year chart: data.bls.gov/pdq/… – Hart CO Dec 17 '17 at 17:20
  • 1
    Your cost of living has not risen in 13 years ! How is that possible ? Groceries cost more every year. Please explain better. – Armando Dec 17 '17 at 17:28
  • 4
    Normally the opposite holds true, you track your expenditures and because CPI baskets contain things like consumer electronics (which do get cheaper over time) the CPI value reported is less than what you calculate yourself. – hroptatyr Dec 17 '17 at 18:30
  • 2
    @HartCO from asker's other posts, they are in the UK. In which case the appropriate things to look are CPIH (includes housing costs) or CPI (doesn't). From the 'Index' time series here, over the 13 years to Nov 2017, the increase in CPI is 35.8% (CPIH doesn't go back 13 years). Not sure where "around 80%" has come from. – AakashM Dec 18 '17 at 9:32

CPI tracks the cost of a fixed bundle of goods, intended to represent the purchases of a 'typical' person. However some things are excluded - mortgage, maybe rent, and some goods with volatile pricing.

If your purchases aren't typical, your expenses won't track the CPI. If your expenses other than CPI goods change, your total cost of living can change completely differently from what the CPI says. If your lifestyle changes then your expenses will also change in a way not corresponding with the CPI.

  • It's a disingenuous way of them to say it that way, but I think the OP is saying CPI has risen by 80% (which could be 1.0% pa to 1.8% pa), not gone to 80%. (It's as similarly misleading as the "scare" headlines that so-and-so "increases your risk of cancer by 50%" when the risk has gone from say 0.01% to 0.015%). – TripeHound Dec 19 '17 at 9:33
  • No, it was an error on my part. The figure is 38%, and I have corrected the question. – Mike M Dec 19 '17 at 14:29
  • 2
    You are 1 person of the 350 million affected. Even if your error is 250% that would not be an indication that there is a problem for all of the other people. You might - and probably do- have very different spending patterns from the typical person. – DJClayworth Dec 19 '17 at 15:34
  • 1
    @MikeM: at least over here in Germany, the Statistische Bundesamt [Federal Statistical Office] does something even better (IMHO) than constructing confidence intervals: they collect, record and publish not only "the" consumer price index but also the prices of lots of individual items and classes of goods (e.g. destatis.de/DE/ZahlenFakten/Indikatoren/Konjunkturindikatoren/…) - and even provide a web app where you can estimate your personal inflation based on how much of what types of goods you consume ... – cbeleites unhappy with SX Dec 19 '17 at 15:42
  • 2
    @Mike M: Because it is not an error for you to be a non-typical person. It is simply a lifestyle choice. – jamesqf Dec 19 '17 at 20:24

Not the answer you're looking for? Browse other questions tagged or ask your own question.