Inflation Calculator
About Inflation Calculator
Understanding Inflation
Inflation is the gradual increase in the general price level of goods and services over time. When inflation runs at 3% per year, something that costs $100 today will cost about $103 next year. That might not sound like much, but over 20 years, that same item would cost $181. Inflation silently erodes the value of cash sitting in a checking account, which is exactly why investing matters. This calculator helps you visualize that erosion and plan accordingly.
The Inflation Formula
The formula is Future Value = Present Value x (1 + inflation rate)^years. To calculate what a future amount is worth in today’s dollars, flip the formula: Present Value = Future Value / (1 + inflation rate)^years. Enter any two values and a time period to find the third.
How to Use This Calculator
Enter a dollar amount, the annual inflation rate, and the number of years. The calculator shows you what that amount will be equivalent to in future dollars, and how much purchasing power is lost. You can use historical average inflation (around 3% for the US) or enter a custom rate based on your expectations.
Frequently Asked Questions
What is the average inflation rate?
In the United States, the long-term average inflation rate has been approximately 3% per year. However, recent years have seen higher rates, and some periods experience deflation.
How does inflation affect my savings?
If your savings earn less than the inflation rate, your money loses purchasing power over time. A savings account paying 1% while inflation runs at 3% means you’re effectively losing 2% per year in real terms.
Can I use this for salary planning?
Yes. Enter your current salary and the expected inflation rate to see what equivalent salary you would need in the future to maintain the same standard of living.
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