Inflation Calculator

Calculate how inflation affects the value of your money over time. Adjust for average inflation rates.

Calculate the effect of inflation on your purchasing power.

About This Calculator

The Inflation Calculator shows how the purchasing power of your money changes over time. Due to inflation, a dollar today is worth less than a dollar in the past, and likely more than a dollar in the future.

Understanding Inflation

Inflation is the rate at which the general level of prices for goods and services is rising. Central banks typically target an inflation rate of around 2% per year.

Scenario Comparison: Inflation Impact Over Time

$100 Today Equals	2% Inflation	3% Inflation	4% Inflation	5% Inflation
In 10 years	$122	$134	$148	$163
In 20 years	$149	$181	$219	$265
In 30 years	$181	$243	$324	$432
Purchasing power lost	45%	59%	69%	77%

Shows how much you need in the future to buy what $100 buys today

Common Inflation Mistakes to Avoid

Keeping all savings in low-yield accounts: If your savings earns 0.5% and inflation is 3%, you're losing 2.5% purchasing power annually. Use high-yield savings (4-5% APY) at minimum.
Not adjusting retirement projections: $1M in 30 years won't buy what $1M buys today. Always plan in "today's dollars" or use inflation-adjusted projections.
Ignoring salary negotiation: If you don't get at least a 3% annual raise, you're effectively taking a pay cut. Advocate for inflation-matching increases.
Using a single inflation rate for everything: Healthcare inflates at 5-6%, education at 6-8%, while overall CPI is 2-3%. Use category-specific rates for major expenses.

Historical Inflation Rate Benchmarks

Period	Average Rate	Notable Events
1990-2000	2.8%	Stable growth period
2000-2010	2.5%	Dot-com bust, 2008 crisis
2010-2020	1.8%	Low inflation era
2021-2023	5-9%	Post-pandemic spike
Long-term average	3.0%	Use for long-term planning

When to Use This Calculator vs Others

This calculator: Best for understanding how inflation erodes purchasing power and adjusting future expense projections.
Investment Calculator: Use to see if your investment returns outpace inflation (aim for real returns of 4-7%).
Retirement Calculator: Use for complete retirement planning with built-in inflation adjustments.
Savings Goal Calculator: Increase your target by expected inflation for goals more than 5 years away.

To protect your savings from losing value, consider investing. Check our Investment Calculator to see how to outpace inflation.

Frequently Asked Questions

How is inflation impact calculated?

Future Value = Amount × (1 + Inflation Rate)^Years. This shows what you'd need in the future to have the same purchasing power as today's amount.

What is a good inflation rate assumption?

Historical US average is ~3%. Recent years saw 5-9%. Central banks target 2%. Use 3-4% for long-term planning, adjust for current economic conditions.

How does inflation affect savings and investments?

Inflation erodes purchasing power. $100 today buys less in 20 years. Investments must beat inflation to grow real wealth. 7% return - 3% inflation = 4% real return.