Anticipating the price of goods in "n" years

Approximate this by calculating the Future Value, FV using financial calculator or excel.

Say, GSC  movie ticket at RM 10.00. Ignoring personal inflation rate, we take CPI increment of 3% per year, in 10 years.

In Excel, type "=fv(", then you will key in "0.03" for "rate", "10" for "nper" which mean n number of periods, "0" for "pmt" which stands for periodic payment, and "-10" for "[pv],  present value for which it must be negative.

You will get the answer RM 14.80. This is the expected movie ticket price in 2022 if inflation remains constant each year.

Personal Inflation Rate

This is perhaps a more important measure for comparing if your income increment matches your desired lifestyle.

Example, it really does not help if the overall reported annual inflation rate is 3% but you choose to obtain hire purchase for a more luxurious car every year. Your monthly commitment will increase, hence the income increment is quickly negated in this case. Then again, a vehicle is still a liability instead of an asset, we are knew that.

In a nutshell, personal inflation rate largely depends on the type and amount of your expenditure. Live modestly is my motto. I could have easily upgraded to a smartphone, just for the pleasure of it but no thanks, unless my good old Nokia stupid phone goes kaput, I do not think I need a new handset for now :)


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