DailyDime

Why CPI misses the inflation many families actually pay

The CPI says inflation was 2.7%.

My household paid 11.3%.

That isn’t a gut feeling. It’s math.

Using the Bureau of Labor Statistics’ own CPI categories, I tracked every dollar my family spent over a full year. Same framework. Same arithmetic. Real receipts.

The result wasn’t close.

This gap isn’t about manipulation or conspiracy. It’s what happens when a policy index gets mistaken for a cost-of-living measure.

The CPI Was Never Designed to Measure Your Inflation

The Consumer Price Index tracks price changes for an “average urban consumer.” That person doesn’t exist.

CPI is excellent at what it was built for: informing monetary policy, indexing benefits, and tracking broad economic trends.

It is much worse at explaining why your budget stopped working.

When CPI is treated as “the inflation people experience,” confusion follows.

Why My Household Looks Nothing Like CPI

My family of six in Columbus, Ohio spends very differently than the CPI average.

Chart: Spending Weights (Side-by-Side)

Category	CPI Weight	My Household
Food	13.7%	14.5%
Energy	6.3%	2.0%
Commodities (ex-food/energy)	19.2%	3.9%
Services (ex-energy)	60.8%	79.6%

Services have been inflating faster than goods. If you live in services, you feel inflation more.

The Numbers That Blew Up My Budget

Here’s where CPI and lived reality truly diverge.

Chart: Inflation — CPI vs My Household

Category	CPI	My Household
ALL ITEMS	2.7%	11.3%
Food	3.1%	9.9%
Energy services	7.7%	34.7%
Transportation services	3.4%	27.2%
Education & communication	1.5%	57.4%
Other personal services	5.4%	42.9%

Inflation depends on what you buy, not what’s averaged. Four categories drove most of the gap: education, insurance & transportation, utilities, and personal services.

These aren’t luxuries. They’re the structure of modern family life.

Why CPI and Reality Diverge (No Tin Foil Required)

1. Life Stage Dominates Inflation

Families with kids face education, childcare, higher insurance, and larger food baskets. Singles and retirees don’t.

CPI averages everyone together.

2. Geography Matters

Energy, housing, and insurance costs vary wildly by region. National averages smooth out pain people actually pay.

3. Substitution Assumptions Hide Pain

CPI assumes consumers downgrade when prices rise. That lowers measured inflation—but also lowers living standards.

You’re “better off” statistically. You just eat worse food.

4. Housing Measurement Misses Cash Flow

CPI uses owner’s equivalent rent, not mortgage, taxes, or insurance. My shelter costs rose 5.8%, not the reported 3.2%.

Policy logic ≠ household cash flow.

Why This Matters for Real People

If your personal inflation is 10–12% and your raise is 3%, that’s a real pay cut.

If your savings rate collapsed, CPI didn’t explain it—your budget did.

CPI is not wrong. It’s just answering a different question than the one households are asking.

Calculate Your Own Inflation (You Should)

Brief steps:

  • Track spending for a year

  • Apply CPI categories

  • Calculate category price changes

  • Weight and sum

When I used CPI weights, inflation was 11.3%. Using my household’s exact weights: ~13%.

Small differences compound fast.

Bottom Line

CPI is a policy tool, not a household budget.

Chart: Who CPI Works For

CPI Works Best For:	CPI Understates Inflation For:
Retirees	Families with kids
Singles	Homeowners
Renters without kids	High-insurance households
Low-service spenders	High-service spenders

The inflation that matters isn’t reported. It’s personal.

And in my household, it wasn’t 2.7%.

Methodology Note

All data was tracked manually over a 12-month period (December 2024 to December 2025) using actual purchase prices from receipts, bills, and financial statements. BLS data was sourced from official Consumer Price Index reports at bls.gov. Calculations followed standard weighted average methodology used by the BLS, but applied to personal price changes. For completeness, using my household’s exact spending weights yields a personal inflation rate of approximately 13.0%.