Inflation Calculator

Enter an amount, an average annual inflation rate and a number of years to see what that money will buy in future and how much purchasing power it loses.

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Enter the details and press Calculate inflation.

The inflation formula

Inflation compounds just like interest. The future cost of something that costs P today, after t years at an average annual inflation rate i, is:

Future cost = P × (1 + i)t

The flip side is buying power: the same money buys less. The real (today's-dollars) value of a future amount is P ÷ (1 + i)t. The percentage of buying power kept is 1 ÷ (1 + i)t.

Worked example

$1,000 at 3% average inflation over 20 years:

Future cost: 1,000 × (1.03)20 ≈ $1,806 to buy the same goods.
Buying power: $1,000 will buy what $553.68 buys today.
Power lost: about 44.6% of purchasing power.

Nominal vs real value

A "nominal" figure is the face amount of money; a "real" figure adjusts for inflation so amounts from different years can be compared fairly. Long-run U.S. inflation has averaged roughly 2–3% per year, but it varies. This tool lets you test any rate so you can see how sensitive long-term plans are to inflation assumptions.

Tip: for actual historical price changes between specific years, the U.S. Bureau of Labor Statistics publishes the Consumer Price Index (CPI), the official measure of U.S. inflation.

Frequently asked questions

How does inflation reduce buying power?

Rising prices mean each dollar buys less. After t years at rate i, money keeps 1 ÷ (1 + i)^t of its power — at 3% for 20 years that is about 55%, so $1,000 buys what about $554 buys today.

How do I calculate the future cost of something?

Multiply today's price by (1 + i)^t, where i is the annual inflation rate as a decimal and t is years. A $1,000 item at 3% inflation costs about $1,806 in 20 years.

What inflation rate should I use?

Long-run U.S. inflation has averaged roughly 2–3% per year, but it varies by period. Testing a range (say 2%, 3%, 4%) shows how sensitive a long-term plan is to the assumption.

Where does official inflation data come from?

In the U.S. the Bureau of Labor Statistics measures inflation with the Consumer Price Index (CPI), tracking the price of a typical basket of goods and services over time.

MB
Mustafa Bilgic · Editor, Calcool
Inflation compounding follows the standard future-value formula. Official U.S. inflation is measured by the Bureau of Labor Statistics Consumer Price Index (CPI). This tool uses a constant assumed rate; real inflation varies year to year.

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