Inflation Calculator
See what money will be worth in the future, and what past money is worth today.
What this tool does
An inflation calculator estimates future purchasing power using an entered inflation rate. Money worth 1,000 today at 3% inflation is worth about 863.84 in five years, and 744.09 in ten. It works in reverse too: 1,000 ten years ago is equivalent to about 1,343.92 today, which is why prices feel so much higher than the headline inflation rate suggests.
Estimates future purchasing power using an entered inflation rate.
Works in reverse: enter a past amount to find what it is worth in today's money.
Shows the cumulative effect of inflation over any number of years.
Displays a year-by-year schedule of value and cumulative loss.
How to use it
- Choose a currency symbol if you want one.
- Enter an amount.
- Enter an inflation rate as a percentage per year.
- Enter the number of years.
- Choose the direction: what it becomes, or what it was worth.
- Read the result and the year-by-year schedule.
Why use this calculator
Estimating future purchasing power using an entered inflation rate turns a vague feeling about prices into a number. Inflation is small every year and enormous over a decade: at 3%, money loses about a quarter of its value in ten years and more than half in twenty-five. That is why a salary that kept pace with inflation for a decade still feels like it went backwards, and why a savings account paying less than inflation is losing money in real terms.
Why we built it
We built the inflation calculator to run both directions from the same inputs, because people ask two different questions: what will this be worth later, and what was that worth back then. The compound interest calculator is the mirror calculation with a positive rate - together they show whether your money is beating inflation or losing to it. The savings goal calculator works in today's money, and the investment calculator projects the real return.
For pay and prices, the salary calculator converts periods, and the inventory turnover calculator shows the cost side for a business.
Who this tool is for
- Savers checking whether their account beats inflation
- Retirees planning a withdrawal that lasts
- Anyone comparing a price today with one from years ago
- Negotiators justifying a pay rise against the cost of living
When to use it
- When comparing a 2016 salary with a current offer.
- Checking whether a savings or bond rate is a real return.
- Planning a long goal such as retirement or school fees.
- Explaining why a budget that felt generous no longer is.
How it is calculated
Future value of money = amount ÷ (1 + rate)ⁿ, because inflation reduces what a sum can buy. Value of past money = amount × (1 + rate)ⁿ, which restates an old figure in today's terms. The cumulative loss over n years is 1 − 1 ÷ (1 + rate)ⁿ.
Worked example: 1,000 today at 3% inflation is worth 1,000 ÷ 1.03⁵ = 863.84 in five years, a loss of 136.16 in purchasing power. The same 1,000 from five years ago would need to be 1,000 × 1.03⁵ = 1,159.27 today to have kept up.
The rule of 72 gives a quick check: divide 72 by the rate to get the years to halve. At 3%, money loses half its purchasing power in about 24 years.
What inflation does over time
| Years | Worth then | Lost |
|---|---|---|
| 0 | 1,000.00 | 0.0% |
| 5 | 863.84 | 13.6% |
| 10 | 744.09 | 25.6% |
| 20 | 553.68 | 44.6% |
| 30 | 411.99 | 58.8% |
| 40 | 306.56 | 69.3% |
At higher rates the effect is faster: at 5%, money halves in about 14 years, and at 10% in about seven. That is why high-inflation countries see salary and price spirals that look irrational from a low-inflation perspective.
A worked example
These are the values the calculator opens with, so you can see exactly what it does with them. Change any value on the page and the result updates; the figures below come from the same calculation.
| Input | Value |
|---|---|
| Currency symbol | $ (dollar) |
| Amount | $1,000 |
| Inflation rate | 3% |
| Years | 10 |
| Direction | What it becomes |
With those inputs, the calculator returns:
- Value in 10 years: $744.09
- Purchasing power lost: $255.91 (25.6%)
- The same amount 10 years ago would need to be: $1,343.92 today
Why a real return matters
A savings account paying 1% when inflation runs at 3% is losing 2% of purchasing power a year. Over ten years that is roughly a 18% real loss, even though the balance on the statement grew. The real return is the nominal rate minus inflation, and it is the only figure that tells you whether your money is actually growing.
| Nominal rate | Real return | 10-year effect |
|---|---|---|
| 0% | -3.0% | -25.6% |
| 1% | -2.0% | -17.9% |
| 3% | 0.0% | 0.0% |
| 5% | +2.0% | +18.9% |
| 7% | +4.0% | +39.7% |
What you enter, and what you get back
| Item | Details |
|---|---|
| Amount | The sum to restate, in either direction. |
| Inflation rate | Annual percentage - use your country's long-run average. |
| Years | The period over which the effect compounds. |
| Direction | What it becomes, or what it was worth. |
| Result | Restated value, cumulative loss and a year-by-year schedule. |
Issues you may run into
| What you see | Why it happens | What to do |
|---|---|---|
| Result looks extreme | Very high rate over many years. | Use a long-run average, typically 2% to 4%. |
| Does not match official figures | Official indices measure a basket, not your spending. | Your personal rate depends on what you buy. |
| Pay comparison seems unfair | Inflation was not the only change. | Compare role, hours and total package, not just the figure. |
| Savings seem to be growing | Nominal balance rises while value falls. | Check the real return: rate minus inflation. |
Assumptions and limitations
- Uses a constant rate; real inflation varies year to year and by category.
- Official indices are a national average - housing, fuel and food can outrun them.
- Does not model tax on interest or returns.
- Long projections compound assumptions that will not hold exactly.
Frequently asked questions
How do I calculate the effect of inflation?
Divide by (1 + rate) raised to the number of years to find what a future sum is worth today: 1,000 at 3% for five years is 1,000 ÷ 1.03⁵ = 863.84. Multiply a past sum by the same factor to restate it in today's money: 1,000 from five years ago is 1,159.27 today.
What is the purchasing power of money?
What a sum can actually buy, which falls as prices rise. If prices double, the purchasing power of a fixed amount halves. Money worth 1,000 today with cumulative inflation of 25.6% over ten years can buy only what 744.09 bought at the start.
How does inflation affect savings?
Every percentage point of inflation above your interest rate reduces the real value of the balance. At 1% interest and 3% inflation, money loses about 18% of its purchasing power over ten years, even though the balance grows on the statement. Beating inflation is the minimum bar for any long-term saving.
What is a good inflation rate?
For planning, 2% to 4% a year is the range most central banks and long-run history support. Below 2% risks a deflationary spiral; sustained rates above 5% erode savings fast. Use your country's long-run average rather than a single year's figure, which can spike.
How do I calculate real return on investment?
Subtract inflation from the nominal return for an approximation: a 5% investment with 3% inflation gives about a 2% real return. For precision, use (1 + nominal) ÷ (1 + inflation) − 1. Over ten years, a 2% real return compounds to about 19% more purchasing power.
How do I protect savings from inflation?
Hold assets that have historically outpaced it - equities, index funds, inflation-linked bonds or I-bonds - rather than cash sitting below the inflation rate. Keep an emergency fund in cash and invest the rest, match the term to the goal, and check the real return rather than the headline rate.