Tracking inflation in personal finance apps
Price shopping, receipt scanning, and budgeting apps offer a way to measure and combat inflation
For months now, pundits have reminded us of the specter of price inflation. In practice, price inflation is measured through consumer and other price indices that most of us know little about. With couponing and receipt scanning apps now commonplace as well as budgeting tools like TrueBill, Mint, and Personal Capital readily available, it could become much more straightforward to observe price inflation in our daily lives.
Those of us higher in the income distribution are concerned about their returns beating the market. What about keeping expenses below the rate of inflation? I’ve seen some news media highlighting how deal shopping apps like Capital One Shopping help save money during inflationary times. But with a little extra thought and app development, one could genuinely measure how well they’re keeping up with inflation.
Would it be valuable to users of personal finance/budgeting apps to view their overall spending over time or spending on certain categories over time relative to these price indices like the CPI (Consumer Price Index)?
Of course, if any of the major personal finance apps start to provide this sort of function, they would need to perform significant analytics of data aggregated across their users, since there may be differences in spending behavior for users of their app relative to other segments of consumers. There’s a concern whether aggregate spending on some category for a specific personal finance app account provides meaningful, reliable information. It may be more relevant to consider spending over time on individual products or individual instances of similar products. Such information is provided by receipt scanning apps or price shopping extensions such as Capital One Shopping, Ibotta, Rakuten, and Honey. What if these apps allowed you to track your potentially increased spending on food, energy, gas, and other goods or services?
Outside of inflationary periods, after enough time, it may be interesting to see deflationary changes as certain products get cheaper over time or higher quality for the price. Electronics are the most obvious example. As our wealth or income grows overtime (or not), it would be telling for us to see our share of spending on different categories change over time. For instance, viewing your spending on food and comparing against Engel’s law (the proportion of family spending on food decreases with income, even if total spending on food increases with income) would put things in perspective.