What this inflation calculator shows
Inflation is the gradual rise in the general price level, which means each dollar buys a little less over time. This calculator projects two things using an average inflation rate you choose: how much something that costs a given amount today might cost in the future, and how much today's dollars would be worth in future purchasing power if they simply sat in cash.
How to use it
Enter an amount, an average annual inflation rate, and a number of years. At 3% inflation, $1,000 of goods today would cost about $1,344 in ten years, and $1,000 kept in a non-interest-bearing account would buy only about $744 worth of today's goods. The percentage lost tells you the share of purchasing power eroded.
Choosing an inflation rate
In the US, inflation is most commonly measured by the Consumer Price Index (CPI), published monthly by the Bureau of Labor Statistics. The Federal Reserve targets 2% inflation over the longer run, measured by a related index (PCE). Actual inflation has varied a lot: it was very low for much of the 2010s and spiked in 2021–2022. For long-range planning, many people test several rates, such as 2%, 3%, and 4%, to see a range of outcomes. For historical comparisons between specific years, the official BLS CPI data is the authoritative source.
Why inflation matters for your plans
- Savings goals: a goal set in today's dollars will need more dollars in the future. Inflate long-range targets before calculating how much to save.
- Retirement: a fixed income loses value each year. A comfortable income today may feel much smaller in 20 years.
- Cash holdings: money earning less than inflation loses real value. Compare your savings APY with the inflation rate.
- Salary: a raise smaller than inflation is a real pay cut.
- Debt: fixed-rate debt becomes easier to repay in real terms when inflation is higher, one reason fixed-rate mortgages can be attractive in inflationary periods.
Real return
The real return on an investment is roughly the nominal return minus inflation. If an account earns 5% and inflation is 3%, the real return is about 2% (more precisely, 1.05 ÷ 1.03 − 1 ≈ 1.94%). Thinking in real terms keeps long-term plans honest.
Protecting against inflation
Common approaches include investing for long-term growth, holding Treasury Inflation-Protected Securities (TIPS) or I bonds, which are designed to track CPI, and keeping only the cash you need for emergencies and near-term goals in low-yield accounts. Each option has its own risks and rules.
Limitations
The calculator uses a constant average rate. Real inflation varies year to year and differs across categories; healthcare, housing, and education have often risen at different rates than the overall index.
Formula used
Future cost: FC = A × (1 + i)t
Future purchasing power of today’s amount: PP = A / (1 + i)t
Purchasing power lost: 1 − 1 / (1 + i)t, where i is the average annual inflation rate and t is years.
Frequently asked questions
What inflation rate should I use?
For long-term planning, try 2%–4% scenarios. For past periods, use official CPI data from the Bureau of Labor Statistics.
Is this the same as the BLS CPI calculator?
No. This projects using an average rate you choose; the BLS calculator uses actual historical CPI values.
Does this include interest earned?
No. It assumes money is held without interest so you can see the pure effect of inflation.
Can inflation be negative?
Yes, that is called deflation. You can enter a negative rate to model it.
Keep planning
- 401(k) Retirement Calculator — project your retirement balance.
- Savings Goal Calculator — set an inflation-adjusted goal.
- Compound Interest Calculator — compare growth with inflation.