Inflation works on prices the way compound interest works on money: a steady rate applied year after year, each year building on the last. This calculator shows both sides of it — what something will cost later, and what today’s money will be worth by then.
Key terms
- Inflation rate — the annual percentage by which the general price level rises.
- Consumer Price Index (CPI) — the measure most countries use, tracking the price of a fixed basket of household goods and services over time.
- Buying power — how much a fixed sum of money can actually buy. It falls as prices rise, even though the number on the note stays the same.
- Deflation — the same thing in reverse, when prices fall.
How it works
One factor drives both answers. Prices are multiplied by it; money is divided by it.
Inflation over time
cost = amount × (1 + r)t · worth = amount ÷ (1 + r)t
r is the annual inflation rate and t the number of years. The two are reciprocals of each other, which is why they never mirror in percentage terms.
At 3% a year, $1,000 of shopping costs $1,343.92 after a decade. The same $1,000 left in a drawer buys what $744.09 buys today. Notice that prices rose 34% while buying power fell 26% — not the same figure, because they are measured against different starting points.
The part that misleads people
Money does not lose value at the inflation rate. At 100% inflation prices double, so your money buys half as much — a fall of 50%, not 100%. The higher the rate, the wider that gap grows. This is why “inflation was 10% so I lost 10%” is close enough at low rates and increasingly wrong at high ones.
It is also why a savings account paying less than inflation loses money in real terms even while the balance grows. A 2% account during 5% inflation leaves you roughly 3% worse off each year.
How to use this calculator
- Enter an amount in today’s money.
- Enter an assumed annual inflation rate. Negative values are allowed for deflation.
- Set the number of years, then read both figures — they answer different questions.
- Use the table to find any single year in between.
For historical figures rather than projections, national statistics agencies publish actual index data. In the United States the Bureau of Labor Statistics maintains the CPI and its own calculator using real recorded rates.
Frequently asked questions
Does this use real historical inflation?
No. It applies one steady rate that you choose, which is useful for projections and comparisons. For what actually happened between two past dates, use an official CPI calculator, which uses recorded index values instead.
What rate should I assume?
Many central banks target around 2%, and long-run averages in developed economies have often been a little higher. Any assumption is a scenario rather than a forecast — it is worth trying a range.
Why do the two percentages not match?
Because they are measured from different bases. A rise from 100 to 134 is +34%; the fall from 100 to 74 is −26%. The same change looks different depending on which end you stand at.
Does inflation affect everything equally?
No. A general index is an average across a basket, and individual categories move very differently — rent, energy and food often diverge sharply from the headline figure. Your personal inflation rate depends on what you actually buy.
Can I use this for salary comparisons?
Yes, and it is one of the more useful applications. Enter an old salary and the inflation since, and you get what it would need to be today to hold the same buying power.
