Inflation Calculator
See how inflation erodes purchasing power or increases future prices.
Inflation is the "silent thief" of wealth. Use our **Inflation Calculator** to see exactly how much purchasing power your money loses over time—and why keeping cash under the mattress is a guaranteed loss.
Details
Avg. US inflation is ~3%
Future Cost
To buy what $100 buys today.
Purchasing Power Loss
What is Inflation Calculator?
Understanding Inflation
**Inflation** is the rate at which the price of goods and services rises. As prices go up, the purchasing power of your dollar goes down. This means you need *more* money in the future to buy the *same* basket of goods you buy today.
Who Should Use This?
- Retirees: To see if their fixed pension will still cover groceries in 20 years.
- Salary Negotiators: To calculate if a 2% raise actually keeps up with a 4% inflation rate.
- Investors: To understand the "Real Return" of their portfolio (Nominal Return minus Inflation).
Why This Tool is Useful
It exposes the danger of "Safety". Many people feel safe keeping cash in a bank. But if inflation is 3% and the bank pays 0.1%, you are **guaranteed** to lose 2.9% of your wealth every single year.
When to Use It
Use it when planning long-term goals (like retirement spending) or when evaluating a salary offer.
How to Use This Calculator
Enter these simple metrics:
- Current Amount ($): The price of an item or salary today.
- Inflation Rate (%): The expected annual rise in prices.
- Low: 2% (Fed Target)
- Average: 3-4% (Historical Norm)
- High: 8-10% (Crisis Periods like 1980 or 2022)
- Years: How far into the future you want to project.
The "Rule of 72" for Inflation
Just as money doubles with interest, purchasing power **halves** with inflation. Divide 72 by the inflation rate to see when your money loses **half its value**.
6% Inflation → 72 / 6 = 12 Years to Halve Value
Formula & Calculation
The calculator uses the compound interest formula, but applied to price growth.
Where:
- FV = Future Value (Price in future dollars)
- PV = Present Value (Price in today's dollars)
- r = Annual Inflation Rate
- n = Number of Years
Example Calculation
Example 1: The Grocery Cart
Scenario: You spend $200/week on groceries. Inflation runs at 4% for 10 years.
Result: That same cart of food will cost $296. You need almost $100 more just to eat the same food!
Example 2: The "Safe" Saver
Scenario: You put $100,000 under your mattress for 20 years. Inflation is 3%.
Result: While you still physically have $100k, it can only buy what $55k buys today. You lost nearly half your wealth by "playing it safe".
Explanation of Results
- Future Cost: The number on the price tag in the future.
- Purchasing Power Loss: The invisible tax you paid for holding cash.
- Trend Line: Notice how the curve gets steeper. Compounding works against you with inflation just as hard as it works for you with investing.
Reference Tables
Value of $100 Over Time
See how fast purchasing power evaporates at different rates.
| Years Passed | @ 2% Inflation | @ 4% Inflation | @ 8% Inflation |
|---|---|---|---|
| 5 Years | $90 value | $82 value | $68 value |
| 10 Years | $82 value | $67 value | $46 value |
| 20 Years | $67 value | $45 value | $21 value |
Why use this calculator?
- Reality Check: Understand why your grocery bill feels so high (it's not just you).
- Investment Goal: Your investments MUST beat this number. If inflation is 3%, your portfolio needs to make 4% just to make a 1% real profit.
Frequently Asked Questions
Frequently Asked Questions
What causes inflation?
Three main drivers: Printing Money (more dollars chasing same goods), Cost-Push (raw materials get expensive), and Demand-Pull (everyone wants to buy, so prices go up).
Is Deflation (falling prices) better?
Actually, No. Deflation crashes economies because people stop spending (waiting for cheaper prices tomorrow). This kills businesses and jobs. Central banks try to keep inflation at a steady, predictable 2%.
Who wins from inflation?
People with **Fixed Debt**. If you owe the bank $100,000 at 3% fixed, and inflation hits 8%, you are paying the bank back with devalued dollars. The debt becomes "cheaper" in real terms while your wages (hopefully) rise.
How do I beat inflation?
You must own assets that rise with prices: **Stocks** (companies raise prices), **Real Estate** (rents rise), and **Commodities**. Cash and Bonds are usually the worst performers during high inflation.
Key Terms & Definitions
Disclaimer: This calculator creates a simplified projection assuming a constant inflation rate. Real-world inflation fluctuates significantly year to year.
Last Updated: January 2026