This inflation calculator runs inflation both ways: what a price today will cost in the future, and what your money’s buying power will shrink to — the silent tax on cash, made visible.
The two cards are the same fact in two directions: a $1,000 basket of goods costs more later, and a $1,000 note buys less later. Cash held still is a shrinking asset whenever inflation is positive.
How Inflation Compounds
Inflation is compound interest working against you: prices multiply by (1 + rate) every year, and your un-invested cash divides by the same factor. The math: future cost = amount × (1 + inflation)ⁿ and future buying power = amount ÷ (1 + inflation)ⁿ — present-value logic with inflation as the discount rate (compare the Present Value Calculator). This tool is part of our Finance Calculators collection.
Worked Example (Verified)
$1,000 at 3% inflation for 20 years:
- A basket costing $1,000 today will cost 1000 × 1.03²⁰ = $1,806
- Meanwhile $1,000 kept as cash buys only 1000 ÷ 1.806 = $554 worth of today’s goods
- Total purchasing-power loss: 44.6% — at a “modest” 3%, with no crisis required
Flip the inputs to income: a salary frozen at $60,000 for a decade at 3% inflation is a $44,657 salary in today’s terms — a 26% real pay cut delivered silently.
Inflation Rates and the Rule of 72
- The US long-run average is roughly 3% (CPI); central banks typically target ~2%. Episodes like 2021–23 ran 7–9%.
- Rule of 72: divide 72 by the inflation rate for the years until money halves in value — 72 ÷ 3 ≈ 24 years at 3%; 72 ÷ 8 = 9 years at 8%.
- Your personal inflation differs from CPI: renters in hot housing markets, parents paying tuition and patients buying healthcare have each faced above-average inflation for years. Use the rate that matches the expense you are planning for — college and healthcare planners often use 4–6%.
- Investments only truly grow when their return clears inflation — the “real return.” A 5% account in 3% inflation compounds at about 2% in buying power.
Related Tools
- Present Value Calculator — discounting with any rate
- Compound Interest Calculator — the same engine, working for you
- Finance Calculators — the full collection
Frequently Asked Questions
How do I calculate the effect of inflation?
Future cost = today’s amount × (1 + inflation rate)^years. Buying power runs the division the other way. At 3% over 20 years, the multiplier is 1.806.
What will $1,000 be worth in 20 years?
At 3% inflation, about $554 in today’s buying power. At 2%, $673; at 5%, only $377.
What is a normal inflation rate to assume?
~3% is the US historical average and a common planning default; ~2% is the Fed’s target. For specific big expenses (tuition, healthcare), use their historically higher rates.
How does inflation affect my savings?
Any return below inflation shrinks real value: a 1% savings account at 3% inflation loses about 2% of purchasing power per year. The calculator’s “buying power” card is that erosion made concrete.
What is the rule of 72 for inflation?
72 ÷ inflation rate = years for prices to double (and idle money’s value to halve). At 4%: 18 years.
Is this inflation calculator free?
Yes — free, instant, no sign-up. It projects assumed constant rates; real inflation varies year to year.