📈Inflation Calculator
Calculate the equivalent value of money over time. See how much your money was worth in the past or will be worth in the future.
Calculation Details
How to Use This Inflation Calculator
Our inflation calculator helps you understand how the purchasing power of money changes over time. Whether you're comparing historical prices, planning for retirement, or understanding the true value of a salary increase, this tool provides accurate conversions based on official inflation data.
How It Works:
- Enter an amount: Any currency amount you want to convert.
- Select the years: Start year and end year for the comparison.
- View results: Equivalent value adjusted for inflation, cumulative inflation, and average annual rate.
Understanding Inflation
What Is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises over time. When inflation rises, each unit of currency buys fewer goods and services - your purchasing power decreases. For example, if inflation is 3% per year, something that costs $100 today will cost $103 next year.
The Rule of 72
A quick way to estimate inflation's impact: divide 72 by the inflation rate to see how many years it takes for prices to double. At 3% inflation, prices double in about 24 years. At 6% inflation, they double in just 12 years. This means money sitting idle loses half its real value over that period.
Consumer Price Index (CPI)
This calculator uses official CPI data to measure inflation. The CPI tracks price changes of a basket of typical goods and services consumed by households - including food, housing, transportation, healthcare, and education. It's the most commonly used measure for inflation and affects everything from salary adjustments to retirement benefits.
Protecting Against Inflation
Leaving money in checking accounts or low-yield savings means losing purchasing power over time. Here are strategies to protect and grow your wealth:
Inflation-Beating Investments
- Stocks and ETFs (7-10% historical return)
- Inflation-indexed bonds (TIPS, I-Bonds)
- Real estate (natural inflation hedge)
- Commodities and gold
What to Avoid
- Cash sitting in checking accounts
- Traditional savings (yields less than inflation)
- Long-term fixed-rate bonds
- Keeping cash "under the mattress"
Important Tip
When negotiating salary or evaluating raises, always consider inflation. A 3% raise in a year with 5% inflation is actually a 2% reduction in your real purchasing power.
Frequently Asked Questions
What is an inflation calculator?
An inflation calculator helps you understand the equivalent value of money across different years. It uses historical Consumer Price Index (CPI) data to calculate how much an amount is worth today compared to a past year, or vice versa.
How does the inflation calculator work?
The calculator uses your country's annual inflation rates to calculate cumulative inflation between two years. It multiplies your input amount by the cumulative inflation factor to get the equivalent value in the target year.
What is purchasing power?
Purchasing power refers to how much goods and services you can buy with a given amount of money. As inflation rises, purchasing power decreases - meaning the same amount of money buys less than before.
Can I calculate future inflation?
Yes, but future projections are estimates based on average historical inflation rates. Actual future inflation can vary significantly based on economic conditions, monetary policy, and other factors.
Financial Accuracy
Disclaimer: This calculator provides estimates for informational purposes only. This is not financial, tax, or legal advice. Please consult a qualified financial advisor for advice specific to your situation.