Can I calculate inflation for a specific product or service?

While inflation is commonly measured at an economy-wide level using broad indexes, it is possible to estimate inflation for a specific product or service category. This requires gathering historical pricing data for the particular item over time.

For example, to calculate inflation for a grocery item like milk, you would need a time series of average milk prices spanning many years. The change in milk prices each year reflects the inflation rate for that product. Comparing the price change to overall consumer price inflation shows whether milk inflation is higher or lower than general inflation.

When enough historical pricing data is available, you can apply the standard inflation formula to calculate the specific cumulative inflation rate over a defined period. If you input the actual prices, online inflation calculators can automate this product-specific inflation calculation.