For our homeowners' insurance plus windstorm coverage, the rise in premiums was 9 percent in 2006 (we are bracing for another hike in 2007). Auto insurance went up 14 percent. (All these increases are without ever making a claim on any of our insurance policies).
On more frequently recurring expenses, the tab is up too. The monthly cable television bill, for example, is 13 percent higher for the same service. On a more modest scale, our average grocery bill was 4 percent higher in 2006 while we bought basically the same things.
And travel expenses - admittedly by design, this being an area we can more easily control - more than doubled last year. The main reason was that we traveled more, but the cost of travel also went up.
All of which makes me wonder how much credence to place on news reports that inflation is on the wane, up only about 2 percent year over year based on changes on the Consumer Price Index for All Urban Consumers (CPI-U), with prices holding steady or even declining in recent months.
My conclusion: Keeping tabs of inflation figures from the Bureau of Labor Statistics makes for an interesting intellectual exercise. It also can help Social Security beneficiaries anticipate annual cost-of-living adjustments, which are based on changes on a separate Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W (the COLA for 2007 is 3.1 percent, based on changes on the index as of each September).
But for drawing up a budget and planning your own finances, the ''official'' inflation figures from the government are not all that helpful. For an accurate picture you need to track what I call your ''personal inflation'' rate, based on the goods and services you actually consume.
Ultimately for each person the key question is, ''How much more am I going to have to spend each year to maintain my standard of living?'' said Alan Levenson, chief economist for T. Rowe Price, a financial services and investment management firm in Baltimore, Md. For the many people whose spending patterns differ markedly from the way the inflation index is constructed, ''chances are they are going to have a different inflation experience,'' Levenson said.
The CPI-U, the most widely quoted of the inflation indexes, measures the changing cost of a number of goods and services and ''weights'' them, that is, assigns them a relative value based on their share of overall consumer spending.
By far the largest ''weighting'' on the index goes to housing costs, which recently accounted for 42.4 percent of the CPI-U (of that, 32.3 percent is for shelter, which includes what we pay for mortgage or rent). Next were transportation costs at 17.4 percent, food and beverages at 15.1 percent, and medical care at 6.2 percent.
Therefore, if your housing costs are mostly fixed - for example, you have a fixed-rate mortgage or you own your home free and clear, as we do - then any large change in the CPI-U that's caused mostly by changes in housing prices would not be reflected as much in your overall costs, Levenson said.
But if your medical expenditures consume much more than 6.2 percent of your budget, as they do for many older Americans, then a spike in health-care costs will affect you much more than the official inflation numbers might suggest.
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* HUMBERTO CRUZ can be reached at AskHumberto@aol. com or c/o Tribune Media Services, 2225 Kenmore Ave., Buffalo, NY 14207.
