📊 Inflation Calculator
Understand how inflation erodes purchasing power over time. Calculate what today's money will be worth in the future, or what a past amount is equivalent to in today's dollars.
Value at 10-year milestones
| Year | Equivalent Value | Cumulative Change |
|---|
Inflation Formula
Past Value = Amount ÷ (1 + rate/100)^years
Where rate is the annual inflation rate (e.g. 3 for 3%) and years is the number of years.
Real-World Example
$1,000 today at 3% annual inflation for 20 years:
How to Use This Calculator
- Choose Future Value to find out what today's money is worth in the future, or Past Value to find out what a past amount equals today.
- Enter the starting amount in dollars.
- Set the average annual inflation rate (US average is ~3%).
- Enter the number of years and click Calculate.
Frequently Asked Questions
Inflation is the rate at which the general level of prices for goods and services rises over time, reducing purchasing power. As inflation increases, each unit of currency buys fewer goods and services.
If your savings account earns less interest than the inflation rate, your money is losing real purchasing power even though the nominal balance is growing. For example, 2% savings interest with 4% inflation means your money loses 2% of real value per year.
High inflation is typically caused by excessive money supply growth, supply chain disruptions, increased demand, energy price shocks, or loss of confidence in a currency. Central banks use interest rate policy as the primary tool to control inflation.
Common inflation hedges include investing in stocks (which tend to grow with the economy), real estate, TIPS (Treasury Inflation-Protected Securities), commodities like gold, and I-Bonds. Holding cash long-term without earning adequate returns leaves you vulnerable.
Related Calculators
Savings Calculator
Calculate how much your savings will grow with regular deposits and compound interest.
Future Value Calculator
Calculate the future value of a lump sum or regular investment at a given rate.
Present Value Calculator
Calculate the present value of a future sum of money using a discount rate.