Inflation Calculator

What This Inflation Calculator Does

This inflation calculator estimates how rising prices change the value of money over time. You enter a starting amount, an assumed average annual inflation rate, and the number of years. The calculator then shows how much money you would need in the future to buy roughly the same basket of goods and services that your money can buy today.

Because inflation steadily erodes purchasing power, understanding its impact is important for long-term goals such as retirement, education funding, or major purchases. Even relatively low inflation can significantly reduce the real value of cash savings over decades.

Key Formula Behind the Calculator

The calculator uses standard compound-growth math. If you start with an amount P today, assume an average annual inflation rate of r% per year, and look out over n years, the amount you would need in the future to maintain today’s purchasing power is:

Where:

• P is the starting amount in today’s money.
• r is the average annual inflation rate (in percent).
• n is the number of years.
• F is the future amount needed to have the same purchasing power as P today.

The calculator assumes a constant average rate. Real-world inflation changes from year to year, but this simplified approach is widely used for long-term planning and “what if” comparisons.

Interpreting the Results

After you enter the amount, inflation rate, and years, the main result shows the estimated amount you would need in the final year to match today’s buying power. In other words, if the calculator shows $1,340, that is how many future dollars you may need to buy roughly what $1,000 buys today at the inflation rate you entered.

If you enable the yearly breakdown, the table shows how the inflation-adjusted value changes each year. This helps you see how inflation compounds gradually at first and then more quickly as time passes.

You can also use the same formula in reverse to ask: “What is a past amount worth in today’s dollars?” For that, you would treat today as the “future” and step the past value forward using an appropriate historical average inflation rate.

Worked Example

Suppose you want to know how much you will need in 15 years to match the purchasing power of $5,000 today, assuming 3% average annual inflation.

1. Enter 5,000 as the starting amount.
2. Enter 3 as the annual inflation rate (%).
3. Enter 15 for the number of years.

Using the formula:

F = 5,000 × (1 + 0.03)15

This gives an inflation-adjusted amount of roughly $7,782. That means that if prices rise at an average of 3% per year for 15 years, something that costs $5,000 today might cost about $7,782 in 15 years.

If your investments or income do not keep pace with this inflation-adjusted amount, your real purchasing power is falling even if the dollar value of your money is rising.

Example Inflation Scenarios

The table below shows how $1,000 today could grow in nominal terms under different inflation rates and time spans. These are not forecasts, just simple illustrations.

Notice how the differences between inflation rates widen over longer periods. A one- or two-point difference in average inflation can mean thousands of dollars more (or less) needed to preserve purchasing power over several decades.

Using the Calculator for Past and Future Values

Estimating Future Needs

To estimate how much you will need in the future to cover an expense:

• Enter today’s cost as the starting amount.
• Use a reasonable long-term inflation estimate (for example, a central bank’s inflation target or your own assumption).
• Set the number of years until you expect to make the purchase.

The output helps you see how much more you might need to save or earn to keep your plans on track.

Comparing Past Amounts to Today

To understand what a past price or salary would be worth today, you can apply the same formula using the number of years between the past date and now, along with an average inflation rate over that period. The resulting figure is a rough “today’s dollars” equivalent of the past amount.

Limitations and Assumptions

• Constant average rate: The calculator assumes a steady average inflation rate over the entire period. Actual inflation varies year to year.
• No official CPI feed: Results are based on the rate you enter; the tool does not automatically pull consumer price index (CPI) data or official statistics.
• General purchasing power: Inflation is measured using a broad basket of goods and services. Your personal spending mix may behave differently.
• No taxes or fees: The calculator does not account for investment taxes, fees, or wage growth. It focuses only on the price level effect of inflation.
• Not a forecast: The results are “what if” illustrations, not guarantees of future inflation or price changes.

For precise historical comparisons, you may wish to consult official statistics from your country’s statistics office or central bank and use their published CPI data alongside this tool.

Practical Tips

• Test a range of inflation rates (for example, 2%, 3%, and 5%) to see best- and worst-case scenarios.
• Review your assumptions every few years, especially after periods of unusually high or low inflation.
• When planning investments, compare your expected return to inflation to understand your real (after-inflation) growth.
• Use the yearly breakdown option to visualize how inflation compounds over time, not just at the end of the period.