There’s the official inflation rate. And then there’s the real one. Officially, inflation is nothing to worry about. Prices rose 1.8 percent in May from a year ago, according to data released today by the U.S. Commerce Department. That's the largest increase since 2012 but still shy of the Federal Reserve's 2 percent inflation target. If your personal budget is increasing less than 2 percent per year, though, you're lucky. A new report from the American Institute for Economic Research shows how rising costs for certain necessities make many Americans' personal inflation rate much higher. Plenty of prices have fallen over the last decade. Men's apparel is off 4 percent since 2000, and furniture and bedding are down 13 percent. But a new suit or mattress are rare purchases for most. Some less avoidable expenses, like water and sewer bills, have doubled since 2000. Gasoline is up 183 percent. So while the CPI is up 47 percent since 2000, the institute’s Everyday Price Index (EPI) is up 69 percent. Unlike the CPI, which tracks more than 200 categories from breakfast cereal to funeral expenses, the Everyday index includes only the prices of frequently purchased goods and services. Higher costs have been even worse for certain consumers. Luke Delorme, a research fellow at the institute, constructed a scenario of a typical family with children and found that it has seen overall costs rise 85 percent since 2000. Among the culprits: college tuition and fees, up 130 percent, and child care, up 72 percent. The scenario assumes the family heats its home with oil, which is up 232 percent since 2000. For aging Americans, it’s rising health-care costs that really hurt. You can see that in an experimental consumer price index the government built to get a sense of costs for the elderly, called the CPI-E. Even though the elderly spend less on everyday expenses like fuel, health care helped push their overall costs 5.9 percent higher than the CPI for workers (the CPI-W) since 1985, according to J.P. Morgan data. Who is least affected by inflation? If you live in a city, rent your home and have skipped both car ownership and parenthood, you're in luck. The institute calculates that this hypothetical "urban renter" has seen costs rise “just” 43 percent since 2000. That’s less than the official inflation rate and half the rise for the institute's model of a family with children. Urban professionals may have seen seen their rent rise recently, and public transportation fares are up 71 percent since 2000. But avoiding gas, car insurance, child care and college means more money left over for, say, a drink. City dwellers complain of $8 beers, but alcoholic beverage prices have lagged behind the official inflation rate by 10 percentage points since 2000. Source: http://www.bloomberg.com/