The CPI number reported in newspapers is only an average. Very few families actually experience "average inflation." A young family renting a home in Bengaluru experiences a very different inflation rate from a retired couple in Mysuru. Here's a stronger narrative direction for your blog:
When businesses or news channel talk about inflation, they usually quote a single number. For example: "Inflation this year was 5%." But what does that really mean? Did everything you spend money on become exactly 5% more expensive? Probably not. Some things may have increased by 2%. Some may have increased by 8%. Some may have increased by 15%. This is because the official inflation number is an average across thousands of products and services. Your personal inflation depends on how you spend your money.
Imagine your grandmother received a treasure box on 15 August 1947 containing:
The box remained unopened until 2026. We know the ₹100 has lost much of its purchasing power. But here is a more interesting question: Lost purchasing power for whom? The answer depends on what the family needs to spend money on.
Consider a couple in their thirties. Their monthly budget is roughly:
For this family, two expenses matter a lot:
If rent increases every year, the family's biggest expense keeps growing. Even if general inflation is 5%, rent may increase much faster in some cities. The family feels housing inflation every month.
Now consider school fees. Many private schools increase fees regularly. Over long periods, education costs have often grown faster than general inflation. For these parents: The inflation rate that matters is not the CPI number. The inflation rate that matters is the inflation of rent and education. A newspaper may say inflation is under control, but the family may still feel financially pressured because their largest expenses are rising much faster.
Now consider a retired couple. Their monthly spending looks very different:
For them, healthcare is a major expense.
Hospital charges, diagnostic tests, specialist consultations and insurance premiums often rise faster than general inflation. A retiree may therefore experience much higher inflation than a working professional. For this family: Healthcare inflation matters far more than food inflation or gadget prices. Even if overall CPI inflation remains moderate, their actual cost of living may rise significantly because healthcare occupies a larger share of their budget.
Imagine the government reports: Inflation this year: 5%. Yet the experience of different families may look like this:
| Family Type | Expenses That Matter Most | Personal Inflation Experience |
|---|---|---|
| Young renter | Rent + education | Higher than CPI |
| Family with home loan | EMI + education | Different from CPI |
| Retired couple | Healthcare + insurance | Higher than CPI |
| College student | Food + transport | Close to CPI |
| Wealthy household | Services + travel | Different again |
The same economy produces different inflation experiences for different people. The Most Important Investing Lesson Many investors make a mistake. They compare investment returns with the headline inflation number. But the comparison should be: Investment Return vs Personal Inflation Suppose:
That sounds good. But if your family's major expenses, such as education and healthcare, are growing at 9% to 10%, your real purchasing power is actually not improving. You are falling behind your own inflation.
Most textbooks define inflation as: A sustained increase in the general price level of goods and services. While technically correct, a more useful definition for investors is: Inflation is the increase in the cost of maintaining your lifestyle. And because every family has a different lifestyle, every family experiences a different inflation rate.
Published Oct. 5, 2026, 3:36 p.m..