Calculate how inflation affects the future cost of an item and the purchasing power of your money.
An inflation calculator shows how the cost of goods and services changes over time due to inflation, and how the purchasing power of a fixed amount of money erodes as prices rise. It answers two related questions: "How much would this cost in the future?" and "How much would today's amount of money actually be able to buy in the future?"
Inflation compounds over time, similar to compound interest — each year's price increase is calculated on the already-inflated price from the prior year, not on the original price.
Formula: Future Equivalent Cost = Current Amount × (1 + inflation rate)years. Future Purchasing Power = Current Amount ÷ (1 + inflation rate)years.
Example: At a 3% annual inflation rate (example rate — enter your expected rate), something that costs $1,000 today would cost roughly $1,344 in 10 years. Conversely, $1,000 in 10 years would have the purchasing power of only about $744 in today's dollars. (Note: all figures in this example are for illustration purposes only and do not represent actual or predicted inflation.)
Inflation in the US is most commonly measured by the Consumer Price Index (CPI), published by the Bureau of Labor Statistics, which tracks the average change in prices for a broad basket of goods and services. Historically, US inflation has averaged roughly 2-3% per year over long periods (example range), though it has varied significantly in shorter periods — including notably higher rates in the early 2020s. Inflation affects financial planning broadly: it erodes the purchasing power of cash sitting idle, increases the future cost of goals like retirement or college, and is one reason many long-term investment return assumptions are quoted in either "nominal" (before inflation) or "real" (after inflation) terms (example rate used in this calculator — actual future inflation is unpredictable).
Inflation in the US is most commonly measured by the Consumer Price Index (CPI), published by the Bureau of Labor Statistics, which tracks the average change in prices for a broad basket of consumer goods and services over time.
No — the default 3% is an example only, often used as a long-term historical average. Actual future inflation is unpredictable and has varied significantly over different time periods, including notably higher rates in some recent years.
Future equivalent cost shows what something costing a certain amount today might cost in the future after inflation. Future purchasing power shows the reverse — what a fixed amount of money (its current value) would be able to buy in the future, which decreases due to inflation.
Inflation increases the future cost of living expenses, meaning a retirement nest egg needs to be larger than it would if prices stayed constant. Many retirement calculators account for this by either inflating future expenses or using a "real" (inflation-adjusted) rate of return.
Nominal return is the stated return on an investment before adjusting for inflation. Real return is the nominal return minus inflation, representing the actual growth in purchasing power. A 7% nominal return with 3% inflation results in roughly a 4% real return.
Yes, though it's uncommon. Negative inflation is called deflation, where prices fall over time rather than rise. This calculator allows for a 0% rate but is generally intended for typical positive inflation scenarios.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only. The default inflation rate is a sample value based on a general long-term historical average and does not represent actual or predicted future inflation. Economic conditions change continuously. Always consult current economic data and a qualified financial advisor before making any financial decisions.