Inflation Calculator

See how inflation raises future prices and erodes the purchasing power of your money over time.

  • Reviewed October 2026
  • Formula and worked example below
  • Free, no sign-up, runs in your browser
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Enter your numbers to see the result.

How inflation compounds

Inflation is the rate at which prices rise. Like interest, it compounds: a 3% rise this year is applied to prices that already rose last year. The calculator shows two sides of the same effect: how much something costing your amount today will cost in the future, and how much today's amount will be worth in future purchasing power.

Future cost = Amount × (1 + i)^n Purchasing power = Amount ÷ (1 + i)^n

Example

At 3% average inflation, something that costs $1,000 today will cost about $1,344 in 10 years. Put the other way, $1,000 kept in cash will buy only what $744 buys today, a loss of about 26% in real value.

Historical context

US consumer price inflation has averaged a little over 3% a year since 1913, but with large swings: above 10% in the late 1970s and early 1980s, near zero after 2008, and around 8% in 2022. Central banks such as the Federal Reserve and the European Central Bank target about 2% a year over the long run.

Protecting your money from inflation

  • Keep only an emergency fund in cash, ideally in a high-yield account.
  • Long-term investments in stocks have historically outpaced inflation.
  • Inflation-protected bonds, such as US TIPS and I bonds, adjust with official price indexes.
  • When planning for retirement, always compare goals in today's dollars.

Frequently asked questions

What inflation rate should I use for planning?

For long-term planning many people use 2.5–3%, close to the long-run average. For short-term estimates, use the latest annual consumer price index figure for your country.

What is purchasing power?

Purchasing power is how much a sum of money can buy. When prices rise, each dollar buys less, so its purchasing power falls.

Is inflation always bad?

Mild, stable inflation of around 2% is considered healthy for an economy. High or unpredictable inflation hurts savers and people on fixed incomes.

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Last reviewed Oct 20, 2026. Results are estimates; check important decisions with a qualified professional.