Expense Inflation Forecast Tool

On the defaults, 3,500 a month at 3% general inflation across ten years comes back as 5,052.81, an increase of 1,552.81 or 44.4%. That is more than 3,500 compounded at 3% would give, which is 4,703.71, and the gap is the point of the tool: the housing share of the budget is not inflated at the rate in the field.

Housing is inflated at a fixed 5%, not at the rate you enter

The calculation splits the budget in two and runs each half at a different rate. The 35% housing share, 1,225 a month, is compounded at a fixed 5% a year and reaches 1,995.40. The remaining 2,275 is compounded at the 3% entered and reaches 3,057.41. Together that is the 5,052.81. The 5% is built into the calculation rather than taken from an input, and the result panel labels its Housing row accordingly.

Where the split actually shows up

That fixed rate is why the housing percentage moves the answer at all. If both halves ran at the same rate the split would cancel out and the share would be irrelevant. Because they do not, raising the housing share from 35% to 50% takes the ten-year figure from 5,052.81 to 5,202.42, and dropping it to 20% takes it to 4,903.19. The wider the gap between the two rates, the more the share matters. Over thirty years the same defaults reach 10,816.40, against 8,495.42 on a single 3% rate throughout.

What the rate field moves

Only the non-housing part of the budget, which is why its effect is smaller than it looks. On the defaults, 2% gives 4,768.61 and 4% gives 5,362.95, so a full point either side of 3% is worth about 300 a month after ten years. The housing half does not respond to it at all.

Two rates, two sources

Consumer price inflation by country is published in the World Bank's open data. Residential property prices are tracked separately by the Bank for International Settlements, whose selected series covers around 60 economies with indices and year-on-year growth in both nominal and CPI-deflated terms, and 23 of those are backdated to around 1970. Comparing the two for a given country is the way to judge whether a 5% housing assumption is close for that market.

What sits outside

The model runs two rates and nothing else. It has no category detail below housing and other, so food, energy, transport and healthcare all move at the general rate together. It applies no deflation path, no volatility around either rate, no change in what a household buys as prices shift, and no tax. The output is a monthly figure in future currency, not in today's purchasing power, so it is not directly comparable with a budget written today.