Inflation Calculator
Calculate how inflation affects purchasing power over time. See the real value of money past and future.
How to Calculate
Future Value = Present Value × (1 + inflation rate)^years
Inflation erodes purchasing power over time. The formula calculates what a current amount will be worth in the future, or what a past amount would need to be to equal today's purchasing power. The inverse formula for past value divides by (1 + rate)^years.
Frequently Asked Questions
What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, reducing the purchasing power of money. A 3% annual inflation rate means prices increase by about 3% each year.
What is a normal inflation rate?
Central banks typically target around 2% annual inflation. The U.S. historical average is about 3%. Rates above 5% are considered high, while deflation (negative inflation) can also be problematic.
How does inflation affect savings?
If your savings earn less interest than the inflation rate, your money loses purchasing power over time. For example, with 3% inflation, $100 today will only buy about $97 worth of goods next year if it earns no interest.
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