Inflation Calculator
See how inflation affects purchasing power over time. Calculate what money from the past is worth today, or project future values.
Calculate Inflation Impact
Inflation Results
What You Could Buy
Historical US Inflation Rates
| Decade | Average Rate |
|---|---|
| 2020s | ~4.5% |
| 2010s | ~1.8% |
| 2000s | ~2.5% |
| 1990s | ~3.0% |
| 1980s | ~5.5% |
| 1970s | ~7.4% |
What is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises, causing purchasing power to fall. At 3% annual inflation, $100 today will only buy what $97 bought last year.
Protecting Against Inflation
- Invest in stocks: Historically outpace inflation
- I Bonds/TIPS: Government bonds indexed to inflation
- Real estate: Often appreciates with inflation
- Negotiate raises: Keep income growing with costs
About the Inflation Calculator
Inflation erodes the purchasing power of money over time. A dollar today buys less than a dollar a decade ago, and will buy less a decade from now. This page covers how inflation is measured, the historical record, and the practical implications for saving and investing.
The Formula
Future cost = Current cost × (1 + inflation rate)^years. Inversely, real value of future dollars = Future dollars ÷ (1 + inflation)^years.
Worked Example
Something costing $100 today, at 3% annual inflation: $100 × (1.03)^25 = $209 in 25 years. Conversely, $1,000,000 in 25 years is worth $478,000 in today's dollars.
Historical US inflation
Long-term US inflation has averaged about 3%. The 1970s saw 7-14% inflation; the 2010s averaged just 1.7%. The 2021-2023 spike (peaking at 9.1% in mid-2022) was the highest in 40 years. Long-term planning at 3% is a reasonable default.
What inflation includes
The Consumer Price Index (CPI) weights housing (33%), transportation (15%), food (14%), medical care (8%), recreation (6%), and more. 'Core inflation' excludes food and energy because they're volatile.
Inflation-protected investments
TIPS (Treasury Inflation-Protected Securities): principal adjusts with CPI. I-bonds: composite rate based on fixed plus inflation portions. Equities historically outpace inflation over long periods. Real estate often does too. Cash and standard bonds typically don't.
Common Mistakes
- Comparing salaries or prices across decades without adjusting. A $30,000 salary in 1990 is roughly $73,000 today.
- Holding too much cash for long periods. Even 'safe' money loses real value.
- Forgetting inflation in retirement planning. Year 25 of retirement, your spending will be double year 1 — at 3% inflation.
Frequently Asked Questions
Is 'shrinkflation' part of inflation measurement?
BLS attempts to adjust for product downsizing, but imperfectly. Real inflation may be slightly higher than reported CPI.
What inflation rate should I use for planning?
3% for long-term planning is standard. Use 4% to be conservative.
This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Consult a licensed professional before making significant financial decisions.