Inflation Calculator
This inflation calculator shows what a steady rate of inflation does to your money over time. Enter an amount, an annual inflation rate, and a number of years, and you'll see two sides of the same coin: what a purchase costing that amount today will cost in the future, and what that amount of cash will actually be worth in today's terms after inflation has done its work.
Because this is a simple planning tool, the inflation rate is yours to choose rather than pulled from a live CPI feed. The Federal Reserve targets 2% per year, and recent US inflation has mostly run between 2% and 4% — with occasional spikes, like the 9% peak in mid-2022 — so try a few rates to see how sensitive your long-term plans are to the assumption.
How it works
The calculator treats inflation as compound growth in prices. Your chosen annual rate is applied once per year for the number of years you enter, so prices grow exponentially rather than in a straight line. From that single growth factor it derives three numbers: the future cost of a purchase that costs your amount today, the future purchasing power of that amount of cash (the same calculation run in reverse), and the percentage of buying power lost along the way.
Formula
With r as the annual inflation rate as a decimal and t as the number of years, the future cost is Future cost = Amount × (1 + r)t. The purchasing power of the same cash is the inverse: Purchasing power = Amount ÷ (1 + r)t. The share of buying power lost is Loss = (1 − 1 ÷ (1 + r)t) × 100%.
Worked example
Suppose inflation runs at 3% per year for 10 years. The growth factor is (1.03)10 ≈ 1.3439, so a purchase that costs $1,000 today would cost about $1,343.92 in 10 years. Run in reverse, $1,000 in cash would buy only what $744.09 buys today — a 25.59% loss of purchasing power, even though the number printed on the bills never changed.
This calculator is for informational purposes only, not professional advice. It assumes a constant, user-chosen inflation rate; actual inflation varies year to year and by what you buy. Consult a qualified financial advisor before making financial decisions.
Frequently asked questions
What inflation rate should I use?
The Federal Reserve targets 2% annual inflation, and US inflation has averaged roughly 2-4% in most recent years, so 2-3% is a common planning assumption. Keep in mind there are outlier years — US CPI inflation peaked around 9% in mid-2022 before falling back. Since this tool uses a rate you choose rather than live CPI data, it helps to run a low, middle, and high scenario to see the range of outcomes.
How does inflation compound over time?
Inflation works exactly like compound interest, just against you. Each year prices rise on top of the already-higher prices from the year before, so the effect snowballs. At 3%, prices rise about 34% over 10 years, not 30%, because each year builds on the last. That is also why cash sitting idle loses purchasing power faster the longer it sits.
What is the difference between CPI inflation and my personal inflation rate?
The Consumer Price Index tracks a broad basket of goods and services meant to represent an average urban household. Your personal inflation rate depends on what you actually buy: renters, drivers, students, and retirees all face different price pressures. Housing, healthcare, and education have often outpaced headline CPI, so if those dominate your budget, consider testing a rate above the official figure.
How can I protect my savings from inflation?
Common inflation-aware options include Series I savings bonds and Treasury Inflation-Protected Securities (TIPS), whose returns adjust with CPI, high-yield accounts that at least partly keep pace, and diversified stock funds, which have historically outgrown inflation over long periods despite short-term swings. Each carries different risks and trade-offs, so this is general information, not personalized investment advice.
Why do small inflation rates matter so much over decades?
A version of the Rule of 72 applies in reverse: divide 72 by the inflation rate to estimate how many years it takes prices to double — and your purchasing power to halve. At 3%, money loses about half its buying power in roughly 24 years; at 6%, in about 12. Over a 30- or 40-year retirement horizon, even a seemingly gentle rate compounds into a dramatic difference.
Is deflation good for my money?
Falling prices do increase the purchasing power of cash, which sounds appealing. But sustained deflation is usually a symptom of a weak economy: consumers delay purchases expecting lower prices, businesses cut wages and jobs, and debts become harder to repay because they are fixed in dollars that are now worth more. That is why central banks aim for low, positive inflation rather than zero or negative.