How to use the inflation calculator
Enter an amount of money, an average yearly inflation rate and the number of years you want to look ahead. The calculator answers two related questions. First, how much will the same basket of goods cost in the future? Second, how much will your current amount of cash actually be able to buy then? The table shows both figures for every year so you can see how the gap widens.
The inflation formulas
Inflation compounds just like interest, only in the wrong direction for savers:
Purchasing power = Amount ÷ (1 + i)years
At 3% a year, prices rise by about 34% over ten years, and $1,000 kept in cash will buy only about $744 worth of today's goods.
Choosing an inflation rate
Many central banks, including the U.S. Federal Reserve and the European Central Bank, target about 2% inflation over the medium term. Actual inflation has often been higher or lower – it spiked in the early 1980s and again in 2021–2023. For long-term planning, many people use 2.5–3.5%. If you want to look at a specific category such as healthcare or college tuition, use a higher rate because those costs have historically risen faster than average prices.
Why it matters
- Retirement planning: an income that seems comfortable today may fall short in 20 years.
- Savings: cash earning less than inflation loses real value every year.
- Salary negotiations: a raise smaller than inflation is a pay cut in real terms.
- Long-term goals: price your goal in future money, then use the compound interest calculator to see how much to save.
This tool uses a constant average rate. Real-world inflation varies year to year, and official price indices such as the Consumer Price Index measure past changes rather than predict future ones.
Frequently asked questions
What is inflation?
Inflation is the general rise in prices over time. As prices go up, each unit of currency buys fewer goods and services.
What inflation rate should I use?
For general planning, 2–3% a year is a common assumption, close to many central-bank targets. Use a higher figure for costs that tend to rise faster, such as healthcare or education.
Does this calculator use historical CPI data?
No. It projects using the constant average rate you enter, which suits planning. Historical comparisons require official CPI tables for specific years.
How can I protect savings from inflation?
Look for returns above the inflation rate – for example inflation-linked bonds, diversified investments or high-yield savings – while keeping an emergency fund in cash.
Last reviewed 2026-10-27. This inflation calculator is provided for general information; verify important decisions with a qualified professional.