What is your personal inflation rate and how do you calculate it?
Inflation remains above the Bank of England's 2% target and could be set to rise, but faster price growth will affect people to differing degrees.
Marc Shoffman
Inflation in the UK has been above the Bank of England’s 2% target since September 2024 and there are fears that the Iran war could push the cost of living measure higher in the UK, but how much this affects you depends on the things you spend your money on.
The Consumer Price Index grew by 3% in January 2026, dropping from 3.4% in the year to December 2025, according to the Office for National Statistics (ONS).
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But as everybody has different shopping habits, your personal inflation rate can differ from the national inflation rate – if you do not drive then rising petrol prices may not affect you directly. Similarly, the rising oil price as a result of supply concerns in the Gulf region could also mean higher energy bills for most people. This could particularly affect those who use heating oil to warm their homes.
What is a personal inflation rate?
Put simply, inflation is a measure of how much the prices of goods and services in an economy have changed over a period of time, usually a year.
The ONS calculates inflation by purchasing the same “basket of goods” every month from different retailers all across the country and working out the average price that the basket costs in the UK.
The basket of goods includes things like eggs, flour, energy costs, nursing home costs, VR headset, vinyl records and much more. The basket is updated each year to make sure it accurately reflects what consumers are buying.
The ONS then compares the price of the basket in one month to its price a year ago, expressing the change as a percentage. This is the inflation rate.
Your personal inflation rate is a measure of how much the goods and services that you consume have changed over a period of time, while excluding price increases for things you do not spend your money on.
Your personal inflation rate can be very different to the overall level of inflation in the economy, and calculating it can be a good way to find out how inflation is actually affecting you.
How do I calculate my personal inflation rate?
You can calculate your personal inflation rate in a similar way to how the ONS calculates the overall rate of inflation.
You should run through your receipts and bank statements to work out the types of things you regularly buy and then create your own basket of goods and services, noting down the price of this.
Once you have a personal basket of goods, you can track the price of it every month when you go shopping.
If you compare this to your expenditure in the same month a year ago (and your spending habits were roughly the same), the difference between the two figures will give you a rough idea of how much prices have gone up or down.
You should make sure you eliminate any factors that could skew your data. For example, you should strip out any expensive one-off payments and make sure you are buying the same brands from the same supermarket or shop.
You should also account for any month-to-month lifestyle changes too. For example, if you hosted a dinner party one month but mostly cooked for yourself in the equivalent month a year later, it’s likely that this cost will distort your food spending figures and make them less comparable.
If you don’t want to do the calculations yourself, it might be easier to use the personal inflation calculator provided by the ONS. This asks you a series of questions, such as:
- What is your current housing situation (e.g. repaying a mortgage or renting)?
- What is your household income?
- How much does your household spend on food and drink?
- How much do you spend on energy bills?
The tool is interactive so, once you have entered your information, it will automatically calculate your personal inflation rate.
Knowing your inflation rate isn’t just a matter of idle curiosity. Noting areas where your budget is seeing big increases can help you make changes, where required.
Finding out your monthly food bill has gone up by over £50 compared to a year ago could be just the incentive you need to switch to a cheaper supermarket.
