Inflation Calculator
See what an amount of money will cost in the future, how much purchasing power inflation quietly erodes, and why cash left sitting in a low-rate account loses value every single year.
How your buying power shrinks over time
This is what today's money is actually worth in each future year, after inflation chips away at it:
How the inflation math works
Inflation compounds — just like interest, but working against you. Each year, prices rise by a percentage, and that increase stacks on top of the previous year's higher prices. The formula is the same exponential growth you see in a compound-interest calculator, only here it measures how much more you'll need to buy the same things.
- Future cost = amount × (1 + rate)years. This is what something that costs your amount today will cost later.
- Future buying power = amount ÷ (1 + rate)years. This is what your money will actually buy in today's terms once inflation has done its work.
- Total inflation is the cumulative price increase across the whole period, not the annual rate.
A small-sounding rate is deceptively powerful over decades. At a typical 3% average, prices roughly double in about 24 years — meaning money you set aside today buys only half as much by then if it isn't growing.
Inflation FAQs
At its core, inflation is too much money chasing too few goods. The usual culprits are demand outpacing supply (demand-pull inflation), rising costs for materials and labor that businesses pass on (cost-push inflation), and growth in the overall money supply. Sudden supply shocks — an energy price spike or a shipping bottleneck — can push prices up fast even when demand is steady.
Keep only your emergency fund in cash, and hold it in a high-yield savings account so it earns close to the inflation rate instead of nothing. For money you won't touch for years, own assets that have historically outpaced inflation — broad stock index funds, I bonds or TIPS, and real assets. The aim is a return above inflation so your buying power grows rather than erodes.
Yes. Central banks typically aim for around 2% a year because mild, predictable inflation nudges people to spend and invest and gives policymakers room to cut rates in a downturn. The problem is high or erratic inflation, which eats into savings and makes planning hard. A little inflation is normal and expected; runaway inflation is what does the damage.
The nominal return is the headline rate your money earns. The real return subtracts inflation, showing the true change in your purchasing power. If an account pays 4% while inflation runs 3%, your real return is only about 1%. Cash earning 0.01% has a deeply negative real return — you're quietly losing ground every year even though the dollar balance looks unchanged.