Each month, the Office for National Statistics (ONS) publishes inflation data showing how much costs have changed over the past year. As everyone has slightly different shopping habits, your personal inflation rate can differ to the national inflation rate – but how do you calculate it?
First of all, it is important to understand how the UK’s official measure of inflation is calculated – the Consumer Prices Index (CPI). To measure CPI each month, the ONS looks at around 180,000 prices across almost 750 typical goods and services, calculating how much prices have changed.
The shopping basket includes things like eggs, flour, energy costs, petrol prices, education costs, and more. The ONS adds and removes items each year to reflect changing consumer habits. Despite this, the basket won’t necessarily accurately reflect price increases in your own lifestyle.
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Vinyl records and air fryers were added to the CPI shopping basket earlier this year, for example, but you might prefer listening to Spotify while eating oven chips. Both of these are also items in the basket, but the point is that a large price increase on an item you don’t typically buy could skew the picture.
On a more serious note, the basket also includes things like nursing home fees and airfares – costs that don’t necessarily feature in every person’s day-to-day life. Meanwhile, it doesn’t include things like mortgage repayments.
How do I calculate my personal inflation rate?
You can calculate your personal inflation rate by running through your receipts and bank statements and noting down how much you spent in the last month.
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 will need to be careful to strip out any expensive one-off purchases you made. Likewise, you should 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. For example, 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.
What is in the ONS shopping basket?
The CPI shopping basket has twelve divisions. These include:
- Food and non-alcoholic beverages
- Alcohol and tobacco
- Clothing and footwear
- Housing and household services
- Furniture and household goods
- Health
- Transport
- Communication
- Recreation and culture
- Education
- Restaurants and hotels
- Miscellaneous goods and services
There is another measure, CPIH, which also includes council tax and owner occupiers’ housing costs. These are the costs associated with owning, maintaining and living in your home.
Before CPI became the official measure of inflation, the Retail Prices Index (RPI) was used. We compare the two indices in: “CPI vs RPI inflation: what is the difference between ONS measures?”
Inflation forecast: where are prices heading next?
After briefly returning to the 2% target last year, price pressures have ramped up again in 2025. The annual rate of inflation rose to 3.8% in July, up from 3.6% in June.
The Bank of England expects inflation to peak at 4% in September before gradually slowing from there, returning to target by the second quarter of 2027.
Rising inflation has been driven by a range of factors this year, including higher food prices, energy prices and water bills. There has also been some uncertainty arising from global developments, including changes in trade policy led by US president Donald Trump.
Some commentators also think higher UK employment costs may have added pressure in recent months, after the minimum wage and payroll taxes went up in April. Businesses previously warned they might look to raise prices to offset the cost.
Despite this, economists expect some of these pressures to unwind towards the end of the year.
“The positive contribution from the energy category should disappear entirely from October,” said Edward Allenby, economist at advisory firm Oxford Economics. “Food price inflation is also expected to cool gradually over the final months of this year and into 2026, as the impact of stronger sterling slowly feeds through.”
Services inflation (5% in July) could remain sticky for a little longer – a key metric given that services account for 80% of the UK economy. However, Allenby expects it to cool “steadily” in 2026.
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