Inflation Calculator
See how inflation erodes purchasing power and what your money is really worth over time
Results & Details
// Purchasing Power Remaining
// Impact at Different Inflation Rates
// Purchasing Power Over Time
Year-by-Year Breakdown
| Year | Inflation | Equivalent Value | Purchasing Power | Cumulative |
|---|---|---|---|---|
| 📊 Calculate above to see yearly breakdown | ||||
Understanding Inflation and Purchasing Power
Inflation is the rate at which the general price level of goods and services rises over time. As prices rise, each unit of currency buys fewer goods — this is known as a loss of purchasing power. A loaf of bread that cost £1 in 2000 might cost £1.80 today due to inflation.
Three Ways to Use This Calculator
Future Value — Enter an amount today and see what it would cost in the future at a given inflation rate. Useful for planning future expenses like education or retirement spending.
Past Value — Enter an amount today and see what it was equivalent to in the past. Useful for comparing prices across time periods.
Find Rate — Enter two amounts and a time period to calculate the implied annual inflation rate between them.
Inflation Formulas
What Is a Normal Inflation Rate?
Most central banks — including the Federal Reserve, European Central Bank, and Bank of England — target an annual inflation rate of around 2%. Rates between 1–3% are generally considered healthy. Above 5% is considered high, and above 10% is severe. Deflation (negative inflation) can also be harmful to an economy.
How to Beat Inflation
Keeping money in cash means it loses value over time. To maintain or grow purchasing power, your savings and investments need to generate a return that exceeds the inflation rate. This is why the "real return" on investments — the return minus inflation — is the figure that truly matters for long-term wealth building.
Inflation: How Money Quietly Shrinks
Built and verified by Andrius R. · Updated June 2026
Inflation is the most consequential financial force most people never calculate. It compounds exactly like interest — just against you. Here's how to read it, measure it, and plan around it.
What steady 3% inflation actually does
Prices rise by ×(1.03)20 = ×1.81 — so what costs $100 today costs about $181 in 20 years. Flip it around: $100 kept under the mattress will buy only about $55 worth of today's goods. Mild-sounding inflation halves your money's buying power roughly every 24 years (Rule of 72: 72 ÷ 3). At 6% inflation, halving takes just 12 years.
How inflation is measured — and why your number feels different
Headline inflation tracks a price index — CPI in the US and UK (the UK also publishes CPIH, which adds owner-occupier housing costs) — built from a weighted basket of goods and services that statisticians re-price every month. It's an average across a whole economy, which is why it rarely matches your experience: if your spending skews toward rent, childcare or medical costs in years when those outpace the basket, your personal inflation rate is higher than the headline. "Core" inflation strips out volatile food and energy — not because they don't matter, but to reveal the underlying trend central banks try to steer (most target ~2%).
Nominal vs real: the distinction that changes every answer
Nominal values are in the money of their day; real values are inflation-adjusted. The conversion: real growth ≈ nominal growth − inflation. A 5% raise during 7% inflation is a ~2% pay cut in real terms. A savings account paying 2% while inflation runs 3% loses ~1% of purchasing power a year, guaranteed. Whenever you compare money across years — salaries, house prices, investment returns, "movies only cost a dollar when I was a kid" — the comparison is meaningless until both numbers are in the same year's dollars. That conversion is exactly what the calculator above does.
Who inflation hurts — and quietly helps
- Hurts: cash savers, anyone on a fixed income, lenders who locked in low rates, and workers whose wages lag prices.
- Helps: borrowers with fixed-rate debt — a fixed mortgage payment stays nominally constant while wages and prices inflate around it, so its real burden shrinks every year. Governments with large debts benefit the same way.
- Mixed: asset owners. Property and equities have historically outpaced inflation over long periods, though with no guarantee in any given decade.
Deflation isn't the cure
If rising prices are bad, falling prices sound great — but economists fear deflation more. When prices fall persistently, consumers delay purchases (it'll be cheaper next month), businesses cut output and wages, and debts grow heavier in real terms — a self-reinforcing spiral that deepened the Great Depression and stalled Japan for decades. This is why central banks target ~2% inflation rather than zero: a small buffer of rising prices keeps the economy clear of the deflation trap while staying mild enough to plan around.
From the Blog
// Rule of 70
Divide 70 by the inflation rate to estimate how many years it takes for prices to double. At 3%, prices double every ~23 years.
// Real Returns
Subtract inflation from your investment return to get the real return. 6% investment − 3% inflation = 3% real growth.
// Cash Loses
Money kept in a low-interest account loses real value every year. Even 1% inflation halves purchasing power in 70 years.
// Salary Check
If your pay rise is less than inflation, you've had a real-terms pay cut. Use this calculator to check your real wage growth.