Recently, the inflation statistics for May 2013 were released. A Washington Post article reported at this time that “U.S. consumer prices rose slightly last month, as higher energy costs partly offset cheaper food. The small increase is further evidence that consumers are benefiting from mild inflation.” It had me saying aloud and in disbelief, “Oh yeah?” since I certainly have seen energy prices higher, but have not seen food prices dip.
But more than that, it had me going back through some of the old receipts that I began keeping as of last year, reviewing the prices of certain items we purchase regularly. Now some people will say that their credit card statements or online sites and applications are all they need to track costs, but personally, I don’t think such tools are always specific enough to provide the full story. And I find that good old-fashioned paper receipts and bills can still provide some valuable insight when it comes to our money.
Developing a personal inflation rate
I find that developing a personal inflation rate is a quite valuable tool in our financial life. Not only can it help us see how much more we’re spending year-over-year on various facets of our budget, but it can help us plan for future expenses moving forward.
And while previously I have taken more of a macro approach to analyzing our family’s cost inflation, not only using an overall rate, but breaking our personal inflation rate down into broad categories such as utilities, food, insurance, etc., I’m finding that my retention of paper receipts has paid off in allowing me to delve even deeper into our inflation numbers.
Individual cost tracking
A credit card statement — online or otherwise — isn’t going to give us a breakdown of individual costs at a store. When we get our statement, there might be a $50 charge for Wal-mart, but I really have not idea of what the individual costs we incurred there were. This can make it hard to track inflation on individual products or even product categories such as meat, dairy, fruits and vegetables, etc.
With my paper receipts though, I can go back and view some of the things we buy regularly and making interesting comparisons. For example, here is a year-over year price comparison between several items that we regularly find on our shopping list:
- 1 gallon of 2% milk: Increased from $1.68 in May 2012 to $2.13 in May 2013, a nearly 27 percent increase.
- Salad dressing: Increased from $1.29 in May 2012 to $1.39 in May 2013, a nearly 8 percent increase.
- Shredded mozzarella cheese: Increased from $2.99 in May 2012 to $3.29 in May 2013, an increase of 10 percent.
- Fruit juice: Increased from $1.79 in May 2012 to $1.89 in May 2013, an increase of 5.6 percent.
- Loaf of white bread: Decreased from .89 cents in May 2012 to .85 cents in May 2013, a decrease of 4.5 percent.
Certain other items like shells and cheese pasta, yogurt, and the price of chicken breasts remained unchanged.
Why these numbers matter and other benefits of paper receipts
Some might look at the above examples and wonder what good this does our family. Well, besides being interesting, it provides us with a more accurate gauge of inflation on the products that we buy regularly, rather than just getting an average overall number reported from the government. It also allows us to make decisions with our shopping purchases that we might not otherwise should we only have a general percent rate of inflation on all food purchases number to work with.
Plus, I’m sure that just about all of us have encountered a situation in which we bought something only to find ourselves saying later after we found it unused, “Darn! I wish I had a receipt so that I could return that.” Or we get home and realize that something we purchased was spoiled or the container was broken and that the receipt was in the grocery store trash can. Sometimes it wouldn’t be worth making the trip back to the store anyway, but if it was, having that receipt could certainly make life easier when it came to getting a refund.
More From This Contributor:
Building a Revenue Producing Blog
How I Differentiate My Blog
Preparing to Publish My First E-book
The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.