Anyone who suspects that their own personal inflation rate is closer to 16 per cent than 2.7 per cent may soon have their fears confirmed, following the launch of a personal inflation calculator.

The Office of National Statistics (ONS) will launch an online tool on January 15 that will enable individual households to work out their own true rate of inflation, based on what they are personally buying.

There are currently two measures of inflation, the Consumer Price Index (CPI) and the Retail Price Index (RPI). They are calculated using the rise in cost of a basket of 650 goods, designed to represent the average household spend.

The CPI rose to 2.7 per cent in November from 2.4 per cent in October as the cost of rising rents and utility bills began to bite.

The basket is regularly updated. Items such as MP3 players and flatscreen televisions were recently added to the index, while chocolate-coated biscuits were removed.

But concern has been growing that the measures do not accurately reflect the rising cost of living in the UK.

Karen Dunnel, statistician for the ONS, said: "People often ask why the National Inflation figures, which we publish every month, do not seem to correspond with their own experience. The most important reason is that the figures are based on average spending patterns. Every household is different, and the way inflation effects them depends on how they spend their money."

The ONS hopes the calculator will enable households to work out their disposable income and plan their spending more easily. It will also publish an information package that aims to improve understanding of inflation measures.

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