General Finance
Inflation Calculator
See what an amount of money today will need to become to buy the same things in the future, and how much its buying power shrinks.
Calculation inputs
The rate is applied evenly every year; real inflation varies year to year.
Results
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Estimates only, for general information.
About this calculator
This calculator projects how much money you will need in the future to match what a given amount buys today, and how much of its buying power a sum loses over time. It is useful for long-range budgeting, salary comparisons and retirement planning.
How the calculation works
- Future value = amount × (1 + rate)^years
- Buying power = amount ÷ (1 + rate)^years
- Loss = 1 − 1 ÷ (1 + rate)^years
Notes and assumptions
Uses a single constant rate; official price indexes move unevenly from year to year.
How it works in plain English
Inflation is the gradual rise in prices across the economy. When prices climb a few percent each year, the same dollar buys a little less every year. Because each year's increase builds on the higher prices of the year before, inflation compounds in the same way interest does on savings.
The tool takes your starting amount, a number of years and an annual inflation rate. It raises one plus the rate to the power of the number of years to get a growth factor. Multiplying your amount by that factor gives the future equivalent value, meaning the sum you would need later to buy what your amount buys now.
Dividing your amount by the same factor shows the opposite view: what today's money will be worth in today's terms if it simply sits still. The purchasing-power loss is the percentage gap between the two. A year-by-year table shows the path, and a rough doubling time tells you how many years it takes for prices to double at the rate you entered. Real inflation varies from year to year, so a single steady rate is a simplification for planning.
The formula
- Future equivalent = amount × (1 + rate)^years
- Buying power = amount ÷ (1 + rate)^years
- Loss % = 1 − 1 ÷ (1 + rate)^years
Worked example
Suppose you have $1,000 and want to know what it means ten years from now with prices rising 3% a year. The growth factor is 1.03 raised to the tenth power, which is about 1.3439.
Multiplying $1,000 by 1.3439 gives a future equivalent of roughly $1,343.92. In other words, a basket of goods costing $1,000 today would cost about $1,344 in a decade.
Going the other way, $1,000 divided by 1.3439 equals about $744.09. If the cash sat in a drawer for ten years, it would buy only what $744 buys today, a purchasing-power loss of about 25.6%. At 3% a year, prices roughly double in about 23.4 years, which shows why savings that earn nothing slowly lose ground over long periods.
Long-run inflation benchmarks
| Benchmark | Annual rate |
|---|---|
| Federal Reserve long-run inflation target | 2% |
| Approximate U.S. CPI average, 1913 to present | About 3% |
| U.S. CPI peak year, 1980 | About 13.5% |
| U.S. CPI in 2022 | About 8% |
U.S. Bureau of Labor Statistics Consumer Price Index history; Federal Reserve stated policy target.
Frequently asked questions
What inflation rate should I use?
For long-range planning many people use somewhere between 2% and 3%, which brackets the central bank target and the long-run historical average. For short-term questions, a recent annual figure from the official consumer price index may be more realistic. Running a few rates side by side shows how sensitive your plan is.
Why does inflation compound?
Each year's price rise is applied to prices that have already gone up. A 3% increase on a $100 item makes it $103, and the next 3% is figured on $103, not $100. Over decades this stacking effect makes the total increase much larger than simply multiplying the rate by the number of years.
What is purchasing-power loss?
It is the share of buying ability a fixed sum gives up as prices rise. If a sum loses 25% of its purchasing power, it can buy only three quarters of what it could before. The figure matters most for cash held for long periods and for incomes or pensions that do not adjust with prices.
Can this calculate past inflation?
The math works in either direction if you know the average rate over the period. To translate an old price into today's money, enter the old amount, the number of years since then and an average historical rate. Exact historical comparisons use official price index values, which change unevenly from year to year.
How do I protect savings from inflation?
In general terms, money keeps its buying power only if it earns a return at least equal to inflation after taxes. That is why long-term savings are often placed somewhere with growth potential rather than idle cash. This calculator only measures the effect of rising prices and does not recommend any product.
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