Planning
Inflation calculator
Enter an amount, an average inflation rate and a time period to see how prices rise and how much purchasing power your money loses.
Some inputs need attention. The results below are from your last valid entries.
Assumptions
Assumes a constant inflation rate. Actual inflation varies from year to year and differs between goods and services.
Purchasing power of your money
| Year | Price of same basket | Purchasing power | Cumulative inflation |
|---|---|---|---|
| 1 | $1,030 | $970.87 | 3% |
| 2 | $1,061 | $942.60 | 6.09% |
| 3 | $1,093 | $915.14 | 9.27% |
| 4 | $1,126 | $888.49 | 12.55% |
| 5 | $1,159 | $862.61 | 15.93% |
| 6 | $1,194 | $837.48 | 19.41% |
| 7 | $1,230 | $813.09 | 22.99% |
| 8 | $1,267 | $789.41 | 26.68% |
| 9 | $1,305 | $766.42 | 30.48% |
| 10 | $1,344 | $744.09 | 34.39% |
| 11 | $1,384 | $722.42 | 38.42% |
| 12 | $1,426 | $701.38 | 42.58% |
| 13 | $1,469 | $680.95 | 46.85% |
| 14 | $1,513 | $661.12 | 51.26% |
| 15 | $1,558 | $641.86 | 55.8% |
| 16 | $1,605 | $623.17 | 60.47% |
| 17 | $1,653 | $605.02 | 65.28% |
| 18 | $1,702 | $587.39 | 70.24% |
| 19 | $1,754 | $570.29 | 75.35% |
| 20 | $1,806 | $553.68 | 80.61% |
What inflation does to money
Inflation is the general rise in prices. If it runs at 3% a year, something that costs $1,000 today costs about $1,806 in twenty years. Put differently, $1,000 held in cash will only buy what roughly $554 buys today.
The formula
The future price is P × (1 + i)^t, and purchasing power is P ÷ (1 + i)^t, where i is the annual inflation rate and t the number of years. Cumulative inflation is (1 + i)^t − 1. The effect compounds just like interest, which is why small differences in the rate matter over decades.
Protecting yourself
- Cash earning less than inflation loses value in real terms.
- Long-term investments such as stocks have historically beaten inflation. Try the compound interest calculator with a lower, after-inflation return.
- Use the investment return calculator to see whether your growth outpaced rising prices.
Frequently asked questions
What inflation rate should I use?
The Fed's stated target is 2% a year, while the long-run US average has been closer to 3%. Using 3% is a sensible planning default.
Why is purchasing power not simply reduced by the inflation rate?
Because prices compound. After 20 years at 3%, prices are 81% higher, but your money has lost about 45% of its purchasing power, not 81%.
Can I use a negative rate?
Yes. A negative rate models deflation, where prices fall and purchasing power rises.
This calculator is for education and illustration. It does not account for taxes, fees or your personal situation unless stated, and is not financial advice.
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