Inflation and your "Raise"

One of the things you want to take note of when your job is giving you a raise is the annual rate of inflation.

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Annual
2009	0	0.2	-0.4	-0.7	-1.3	-1.4	-2.1
2008	4.3	4	4	3.9	4.2	5.0	5.6	5.4	4.9	3.7	1.1	0.1	3.8
2007	2.1	2.4	2.8	2.6	2.7	2.7	2.4	2	2.8	3.5	4.3	4.1	2.8
2006	4	3.6	3.4	3.5	4.2	4.3	4.1	3.8	2.1	1.3	2	2.5	3.2
2005	3	3	3.1	3.5	2.8	2.5	3.2	3.6	4.7	4.3	3.5	3.4	3.4
2004	1.9	1.7	1.7	2.3	3.1	3.3	3	2.7	2.5	3.2	3.5	3.3	2.7
2003	2.6	3	3	2.2	2.1	2.1	2.1	2.2	2.3	2	1.8	1.9	2.3
2002	1.1	1.1	1.5	1.6	1.2	1.1	1.5	1.8	1.5	2	2.2	2.4	1.6
2001	3.7	3.5	2.9	3.3	3.6	3.2	2.7	2.7	2.6	2.1	1.9	1.6	2.8
2000	2.7	3.2	3.8	3.1	3.2	3.7	3.7	3.4	3.5	3.4	3.4	3.4	3.4
1999	1.7	1.6	1.7	2.3	2.1	2	2.1	2.3	2.6	2.6	2.6	2.7	2.2

Now a lot of jobs offer you the standard 3% raise annually. The average rate of inflation over the past 10 years is 2.82%. This means that the items you buy at the end of the year cost 2.82% more than they did at the start of the year. With a 3% raise your buying power only increased .18%. or to put it into words eighteen hundredths of a percent.

For those of you that did not get a raise last year, myself included, we actually took a 3.8% pay cut.

We all know that times are tough and we should be thankful to have gainful employment. However, let's not lose sight of the fact that even during far better times we still only increased our buying power by less than half of a percent.