Inflation Calculator — See How Inflation Affects Your Money
Use this free inflation calculator to understand how inflation erodes purchasing power over time. Calculate how much money you’ll need in the future to match today’s spending power, or find out what today’s money was worth in the past. Includes year by year breakdown and multi-rate comparison.
Inflation Calculator
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How to Use the Inflation Calculator
Choose your mode — Future Value to see how much your money will be worth over time, or Purchasing Power to see what money was worth in the past. Enter your amount, inflation rate and number of years then click Calculate.
What Is Inflation?
Inflation is the rate at which the general price level of goods and services rises over time — meaning the purchasing power of money falls. A 3% annual inflation rate means something costing $100 today will cost $103 next year and $134 in 10 years.
Central banks like the Federal Reserve, Bank of England and Reserve Bank of Australia typically target an inflation rate of around 2% per year as healthy for economic growth.
How Does Inflation Affect Savings?
If your savings account pays 2% interest but inflation is 3% your money is actually losing purchasing power at 1% per year. This is known as a negative real return. To beat inflation your investments need to grow faster than the inflation rate.
Formula: Real Return = Nominal Return − Inflation Rate
For example a savings account paying 4% during 3% inflation has a real return of just 1%.
Historical Inflation Rates
Average annual inflation rates by country vary significantly over time. General long term averages:
United States — approximately 3% per year over the last century
United Kingdom — approximately 3-4% per year long term
Australia — approximately 3% per year long term
Eurozone — approximately 2% per year since introduction of the Euro
The calculator defaults to 3% which is a reasonable long term average for most developed economies.
FAQs
What is a good inflation rate?
Most central banks target 2% annual inflation as healthy for economic growth. Above 5% is considered high inflation. Above 10% is severe. Deflation — negative inflation — can also be harmful to economies.
How does inflation affect my savings?
If your savings earn less interest than the inflation rate your money is losing real purchasing power even as the balance grows. Always compare your savings rate against current inflation to understand your real return.
What inflation rate should I use in the calculator?
For long term planning 3% is a reasonable assumption for most developed economies. For short term planning use the current rate in your country — check your central bank website for the latest figure.
How does inflation affect retirement planning?
Inflation is one of the biggest risks in retirement planning. Money saved today will buy less in 20-30 years. Our Retirement Calculator accounts for inflation when projecting future values.
What is the difference between inflation and interest rates?
Inflation measures how fast prices rise. Interest rates are set by central banks partly to control inflation. Higher interest rates typically slow inflation by making borrowing more expensive and reducing spending.
Is this calculator free?
Yes completely free with no sign-up needed.