Inflation Calculator
Find out how inflation affects the value of your money over time. Enter an amount, set an inflation rate, and see what your money will be worth in the future — or what it was worth in the past.
Quick examples:
How much will your money be worth in the future after inflation?
The amount of money you have today
The average US inflation rate is around 3%. Negative values represent deflation.
Inflation Impact
Future Purchasing Power
Total Inflation
Purchasing Power Change
$1,000.00 today will only have the purchasing power of $744.09 in 10 years at a 3.00% annual inflation rate.
Purchasing Power Over Time
(10 years)Related Calculators
How This Calculator Works
This inflation calculator helps you understand how inflation erodes the value of money over time. It operates in two modes: forward mode shows what today's money will be worth in the future after accounting for inflation, while backward mode shows what a past amount of money would be equivalent to in today's dollars.
Forward Mode (Future Purchasing Power)
Adjusted Value = Amount / (1 + r)^n
Calculates how much your money will be worth in the future after inflation reduces its purchasing power. Enter today's amount, an expected inflation rate, and a number of years to see how much less your money will buy. This is useful for retirement planning and long-term financial goals.
Backward Mode (Historical Equivalent)
Adjusted Value = Amount x (1 + r)^n
Calculates what a past amount of money would be worth in today's dollars. Enter a historical amount, the average inflation rate over that period, and the number of years ago to see its modern equivalent. This is helpful for understanding historical prices and salary comparisons.
Understanding Inflation
What Is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises over time. When inflation occurs, each unit of currency buys fewer items than it did before. Central banks, like the US Federal Reserve, aim to manage inflation to maintain economic stability. A moderate level of inflation is considered normal and healthy for a growing economy.
Historical US Average (~3%)
Over the past century, the average annual inflation rate in the United States has been approximately 3%. This means that prices have roughly doubled every 24 years. While some decades saw very low inflation (or even deflation), others experienced much higher rates, such as the double-digit inflation of the late 1970s and early 1980s.
The Fed's 2% Target
The Federal Reserve targets a 2% annual inflation rate, measured by the Personal Consumption Expenditures (PCE) price index. This target is considered low enough to prevent rapid erosion of purchasing power, but high enough to avoid deflation, which can be even more damaging to the economy. The Fed uses monetary policy tools like interest rate adjustments to steer inflation toward this target.
Real-World Examples
In 1990, the average price of a gallon of gas in the US was about $1.15; by 2024 it was over $3.50. A movie ticket that cost $4 in 1990 now averages $11 or more. These everyday examples illustrate how inflation compounds over time, making it essential to factor into any long-term financial plan, from retirement savings to salary negotiations.
Common Use Cases
Retirement Planning
Long-termEstimate how much purchasing power your retirement savings will have decades from now. If you plan to retire in 30 years, this calculator shows that $1,000,000 at 3% annual inflation would have the purchasing power of only about $412,000 in today's dollars. This helps you set more realistic savings targets.
Salary Negotiations
AnnualDetermine whether a raise keeps up with inflation. If you received a 2% raise but inflation was 3%, your real purchasing power actually decreased. Use this calculator to quantify the gap and make a data-driven case for compensation adjustments that at least match the inflation rate.
Long-term Savings
5-20 yearsUnderstand the true growth of your savings by accounting for inflation. A savings account earning 1.5% interest during a period of 3% inflation means you are losing about 1.5% of purchasing power each year. This calculator helps you see the real value of your money over time.
Historical Comparisons
Any periodCompare prices and wages across different time periods. Find out what a $30,000 salary in 1990 would be equivalent to today, or what a $5 item from 2000 would cost now. This is useful for understanding economic history, comparing generational wealth, and putting historical figures into modern context.
What This Calculator Assumes
To keep the results clear and easy to interpret, this calculator makes several simplifying assumptions. Understanding these will help you use the projections appropriately:
- •Constant annual rate: The inflation rate stays the same for every year in the projection. In reality, inflation fluctuates year to year and can spike or dip due to economic conditions, policy changes, or supply shocks.
- •Annual compounding: Inflation is compounded once per year. While prices change continuously in the real world, annual compounding provides a close approximation that is standard for inflation calculations.
- •No taxes or fees: The results do not account for taxes on savings, investment fees, or other costs that may further reduce the real value of your money over time.
- •General rate, not tied to specific goods: The inflation rate used is a general average. Individual categories like healthcare, education, or housing may experience significantly higher or lower inflation than the overall rate.
- •US dollars by default: Values are displayed in USD, but the math works for any currency. Simply use the inflation rate appropriate for your country's economy.
Disclaimer: This tool provides estimates for personal planning purposes only. It is not financial advice. Actual inflation rates vary and are unpredictable. For significant financial decisions, consider consulting with a qualified financial advisor who can account for your complete financial picture.
Frequently Asked Questions
What is inflation and how does it affect my money?
Inflation is the gradual increase in the general price level of goods and services over time. As prices rise, each dollar you hold buys less than it did before, reducing your purchasing power. For example, if inflation averages 3% per year, something that costs $100 today would cost about $134 in 10 years. This means the same $100 bill will buy roughly 25% fewer goods a decade from now.
How do I calculate inflation over time?
To calculate how inflation reduces purchasing power (forward mode), divide your current amount by (1 + inflation rate) raised to the number of years: Adjusted Value = Amount / (1 + r)^n. To calculate what past money is worth in today's dollars (backward mode), multiply the amount by (1 + r)^n. For example, $1,000 at 3% inflation over 10 years has a future purchasing power of $1,000 / (1.03)^10, which equals approximately $744.
What is a good inflation rate to use for projections?
The US Federal Reserve targets a 2% annual inflation rate, but the historical average in the United States is closer to 3% per year. For conservative long-term projections, 3% is a reasonable assumption. For shorter-term planning, you may want to use a rate closer to recent actual inflation figures. This calculator defaults to 3%, which balances historical trends with the Fed's target rate.
What is the difference between inflation and purchasing power?
Inflation refers to the rate at which prices increase over time, while purchasing power describes how much your money can actually buy. They are inversely related: as inflation goes up, purchasing power goes down. If inflation is 3%, the purchasing power of $100 drops to about $97 in real terms after one year. This calculator helps you visualize that relationship over any time horizon.
How does inflation affect my savings?
If your savings earn a lower interest rate than the inflation rate, you are effectively losing money in real terms. For example, if your savings account earns 1% but inflation is 3%, your purchasing power decreases by about 2% each year. Over 20 years, this could erode nearly a third of your savings' real value. To preserve and grow your wealth, your investments should earn a return that exceeds the inflation rate.
What is deflation?
Deflation is the opposite of inflation — it occurs when the general price level decreases over time, meaning your money gains purchasing power. While this sounds beneficial, sustained deflation can be harmful to the economy because it discourages spending and investment, potentially leading to economic contraction and higher unemployment. Historically, deflation is rare and usually associated with economic downturns, such as the Great Depression.
How is inflation measured?
In the United States, inflation is primarily measured using the Consumer Price Index (CPI), published monthly by the Bureau of Labor Statistics. The CPI tracks price changes for a basket of common goods and services including food, housing, transportation, and healthcare. Another common measure is the Personal Consumption Expenditures (PCE) price index, which the Federal Reserve uses for its 2% inflation target.
Why does this calculator use a constant inflation rate?
This calculator uses a constant annual inflation rate for simplicity and ease of projection. In reality, inflation fluctuates from year to year and can spike due to supply shocks, monetary policy changes, or economic crises. Using a constant rate provides a reasonable approximation for planning purposes and makes it easy to compare different scenarios. For the most accurate results, use a rate that reflects historical averages or your best estimate of future conditions.
How much has inflation increased in the last 10 years?
Over the last decade, US inflation has averaged roughly 2.5% to 3% per year, though individual years have varied significantly. The period from 2021 to 2023 saw notably higher inflation, with annual CPI rates exceeding 6% to 9% at their peak. Looking at the full picture, cumulative inflation over the past 10 years means prices have risen approximately 25% to 35% overall, depending on the exact time frame and measure used.
Can I use this calculator for currencies other than USD?
Yes, while this calculator displays values in US dollars by default, the underlying math works for any currency. Simply enter the amount in your local currency and use the inflation rate applicable to your country. The formulas for purchasing power and inflation adjustment are universal across all currencies. Keep in mind that inflation rates vary significantly between countries, so be sure to use the rate relevant to your specific economy.