Inflation Calculator
Convert money across years and see how inflation erodes purchasing power.
About Inflation Calculator
Inflation raises prices over time. Something costing your amount today will cost 'future cost' later, and the same money will only buy what 'future value' represents in today's terms.
Formulas
Future cost
Future Cost = Amount × (1 + r)ⁿ
- C_n
- Cost after n years
- A
- Amount (price) today
- r
- Annual inflation rate (decimal)
- n
- Number of years
Purchasing power
Purchasing Power = Amount ÷ (1 + r)ⁿ
- P_n
- Purchasing power of today's amount in n years
Worked example
With the default values below, Inflation Calculator returns Future Cost of Today's Basket of $1,806.11. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Amount Todayaccepts 1–10,000,000 $
- 1,000 $
- Annual Inflation Rateaccepts 0–20 %
- 3 %
- Yearsaccepts 1–100 years
- 20 years
Results
- Future Cost of Today's Basket
- $1,806.11
- Future Value of Today's Money
- $553.68
- Purchasing Power Lost
- $446.32
Step by step
- 1Calculate the cumulative inflation factor: (1 + r)ⁿ= 1.8061
- 2Future cost — what today's basket will cost then= $1,806.11
- 3Purchasing power — what today's money buys then= $553.68
- 4Purchasing power lost= $446.32At 3.0% annual inflation, 44.6% of today's purchasing power is eroded over 20 years.
Assumptions and limits
- The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take tax or fees or charges into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- Estimates only; actual inflation varies year to year and is not predictable.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Inflation Calculator — full guide
One factor, read two ways
Inflation can be run forwards or backwards. Forwards: what will today's basket cost in n years? Backwards: what will today's money buy then? Both use the same growth factor — one multiplies by it, the other divides. The calculator reports both figures plus the share of purchasing power lost in between.
That is useful for pricing a distant goal in the money of the year you will pay it, for judging whether a fixed pension or a fixed-rate deposit keeps pace, and for deciding whether a pay rise is a rise at all.
Formulas
Future Cost = Amount × (1 + r)^n
Purchasing Power = Amount ÷ (1 + r)^n
Power lost = 1 − 1 ÷ (1 + r)^n
Here r is the annual inflation rate as a decimal and n is the number of years. The 3% default is an assumption rather than a measurement; published inflation differs by country and swings year to year, so enter a figure that reflects where you actually spend.
Working the defaults
$1,000 today, 3% a year, 20 years.
- Growth factor: 1.03^20 = 1.806111
- Future cost of today's basket: 1,000 × 1.806111 = $1,806.11
- Future value of today's money: 1,000 ÷ 1.806111 = $553.68
- Purchasing power lost: 1 − 553.68 ÷ 1,000 = 44.6%
| Horizon at 3% | Cost of today's $1,000 basket | What $1,000 will buy |
|---|---|---|
| 10 years | $1,343.92 | $744.09 |
| 20 years | $1,806.11 | $553.68 |
Both columns describe one fact from opposite ends: the item priced at $1,000 now will be ticketed at $1,806.11, and the $1,000 in your account will do the work of $553.68.
Interpreting the result
A handy reference point: at 3%, money loses half its buying power in about 23.4 years, since ln 2 ÷ ln 1.03 = 23.4. That is well inside a working life, and comfortably inside a retirement.
The figure to compare against is your return, not zero. Cash earning 3% while prices rise 3% leaves you exactly where you began in real terms, before any tax on the interest. Only the margin above the inflation rate represents real gain.
Common mistakes
- Multiplying instead of compounding. Treating 20 years at 3% as a flat 60% gives $1,600 and understates the real $1,806.11.
- Reading the two outputs as alternatives, or adding them together. They are two statements of the same calculation.
- Applying a national average to a basket you do not buy. Your own mix of rent, fees, fuel and groceries can run considerably faster or slower than any headline index.
- Comparing a future price to a present salary. Inflate both, or deflate both.
Estimates only; actual inflation is not predictable. Use the investment calculator to see whether a portfolio outpaces these numbers, the compound interest calculator for the same math applied to savings, and the percentage increase calculator for a single year-on-year change.
Guides that use this calculator
Estimates only; actual inflation varies year to year and is not predictable.
Frequently Asked Questions
What inflation rate should I use?
Long-run inflation in developed economies has averaged around 2–3% per year, though it varies significantly by period and country.
Why does my money lose value?
As prices rise, each dollar buys fewer goods. Holding cash that doesn't earn at least the inflation rate steadily reduces your real wealth.
Can I use this to see what a price from thirty years ago is worth today?
Yes, with a caveat. Put the old price in Amount Today, your assumed average rate in, and 30 in Years; the Future Cost output is the equivalent in current money. At 3%, an item that cost $500 thirty years ago equates to $1,213.63. It is only as good as the single average rate you supply, since real inflation varied year by year.
My salary went up 5% and prices rose 3%. What did I actually gain?
About 1.94%, not 2%. Divide rather than subtract: 1.05 ÷ 1.03 = 1.0194. The subtraction shortcut is close enough at low rates but drifts as rates climb. On a $75,000 salary that is roughly $1,456 of real gain rather than the $1,500 the simple subtraction suggests.
Does 44.6% purchasing power lost mean I lose 44.6% of my money?
No. The $1,000 is still $1,000; what shrinks is what it buys. After 20 years at 3% it covers what $553.68 covers today, which is a 44.6% reduction in goods, not in the balance. If the money is invested and earns above 3%, the nominal balance grows while this erosion runs alongside it.
For a goal 20 years out, do I target the future cost or the future value?
Target the Future Cost. A goal priced at $1,000 in today's money needs $1,806.11 available in 20 years at 3%. The Future Value output answers the opposite question — what money set aside now will be worth — and using it as a savings target would leave you about 45% short.