May 2022 – Calculating my personal inflation rate

Yes, I know I’m late again. June’s one following up soon.

I really enjoyed this animation from r/dataisbeautiful, which elegantly shows (US) inflation. Think the UK is fairly similar, at least according to my wallet (1).

In response to this, I thought it worthwhile to follow up on a good Monevator post, and calculate my personal inflation rate (2). I’ve been systematically tracking my household expenses using broadly the same spreadsheet since 2018. All our household bills go through our joint account, which I’ve used for this. It doesn’t take into account personal spending, where there is likely some inflation matching my work overheads (increased seniority = increased GMC/ indemnity/ royal college fees). I also excluded the costs for our wedding, and paying off our old joint credit card which is now empty – i.e. one-offs that are not repeating. Since 2018 our household expenditure was:

  • 2018 – £34,828
  • 2019 – £25,895
  • 2020 – £25,405
  • 2021 – £26,005
  • 2022 – £29,118 – projected based on spending to May replicated across the year

Can you tell when I started paying attention to the money-out category?

If we treat 2018 as an outlier this suggests my inflationary change from 2019 to 2020 was -1.89%, 2020 to 2021 was 2.36%, and 2021 to 2022’s projected spend is 11.97%. A little above the reported UK figure, but not crazy especially given we’ve added a new family member. Plug this into the geometric average return calculator (3) suggested by Monevator and I get a return of 3.99% per year. This seems properly realistic, so I’ll use this figure for future household predictions, and continue to update as we go. A nice little maths exercise which I would recommend to those with a finance interest.

May Finances

Checking the assets and liabilities:

These are taken, as always, from my Beast Budget spreadsheet. I saved 2% of my salary in May. A new car was bought draining some savings, and I’m holding my usually saved/ invested cash to pay for some childcare, so it’s not really saving. Helpfully my net worth actually increased slightly (1%), due to mortgage payments and market movements.

Budgets:

As compared to my four year back-calculated mean monthly spend:

  • Groceries: April £220, May £150, budget £220
  • Eating out & Takeaway: April £50, May £54, budget £50
  • Transport: April £158, May £1000, budget £330 – Insurance mostly
  • Holiday: Apr £0, May £180, budget £40
  • Personal: Apr £60, May £20, budget £120
  • Health: Apr £92, May £50, budget £150
  • Misc: Apr £92, May £7500, budget £215 – And the new car
  • Work fees: Apr £344, May £125, budget £265

In the garden:

Low maintenance growth this year, as all my time is taken up by the Shrink infant. Beans, potatoes and squash will have to do. I’m enjoying this blog from Allan Jenkins about general gardening stuff (4).

Cheers,

The Shrink

References:

  1. https://www.reddit.com/r/dataisbeautiful/comments/vhciop/oc_inflation_and_the_cost_of_every_day_items/
  2. https://monevator.com/personal-inflation-rate/
  3. https://goodcalculators.com/geometric-average-return-calculator/
  4. https://www.theguardian.com/lifeandstyle/2022/jun/05/the-growing-season-gets-into-full-swing

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