Inflation Gets Personal

Inflation is defined as the long-term, sustained rise in the general price level of goods and services. The most popular measure of inflation is the Consumer Price Index.

The CPI, calculated monthly by the Bureau of Labor Statistics, tracks prices for a basket of commonly used goods and services (such as food, clothing, housing, and medical care) to measure inflation at the consumer level. In 2009 the inflation rate was 2.72%, but over the past 30 years inflation has averaged 3.51% annually.¹

The CPI attempts to measure the rate of inflation experienced by the average American, but this figure may not be entirely applicable to your situation. For example, depending on your lifestyle and where you live, your costs for housing, food, and medical care may vary significantly from the national averages.

Because the CPI may have only limited usefulness when trying to measure how inflation affects your personal finances, the accompanying worksheet can help estimate your personal inflation rate. This information may help you better understand how inflation could affect your financial future, especially retirement.

1) Thomson Reuters, 2010 (CPI for the periods 12/31/2008 to 12/31/2009 and 12/31/1979 to 12/31/2009)

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald.

Craig Mendenhall, Steve Pilger, and Trina Good offer securities products & services through Royal Alliance Associates, Inc. Member FINRA/SIPC, a registered broker-dealer. In this regard, this communication is strictly intended for individuals residing in the states of Alaska, Arizona, California, Idaho, Ohio, Oregon, Texas, and Washington. No offers may be made or accepted from any resident outside the specific state(s) referenced.

Craig Mendenhall and Steve Pilger offer advisory services in the state of Washingtion through BBM Financial Services, a registered investment advisor, not affiliated with Royal Alliance Associates. Craig Mendenhall offers additional advisory services through Royal Alliance Associates, Inc.

A broker/dealer, investment advisor, BD agent or IA representative may only transact business in a particular state after licensure or satisfying qualification requirements of that state, or only if they are excluded or exempted from the state`s broker/dealer, investment advisor, BD agent or IA rep requirements, as the case may be: and follow up, individualized responses to consumers in a particular state by a broker/dealer, investment advisor, BD agent, or IA rep that involve either the effecting or attempting to effect transactions in securities or the rendering of personal investment advice for compensation, as the case may be, shall not be made without first complying with the state`s broker/ dealer, investment advisor, DB agent or IA rep requirements, or pursuant to an applicable state exemption or exclusion. For information concerning the licensure status or disciplinary history of a broker/dealer, investment advisor, BD agent, or IA rep, a consumer should contact his or her state securities law administrator.