Free inflation calculator. Project how prices rise over time, calculate purchasing power loss, and find the future cost of goods using a custom or average inflation rate.
Inflation erodes the purchasing power of money over time. At 3% annual inflation, $100 today buys only $74 worth of goods in 10 years. At 5%, it drops to $61. Understanding inflation's impact is critical for retirement planning, salary negotiations, and long-term financial decisions.
The formula is straightforward: Future Value = Present Value × (1 + inflation rate)^years. Or inversely: Present Value = Future Value / (1 + inflation rate)^years. The US Federal Reserve targets 2% annual inflation, but actual rates have ranged from -2% (deflation) to 9%+ in recent decades.
This calculator projects future prices, calculates purchasing power loss, and shows year-by-year inflation impact for any time period and rate. Whether you are estimating the future cost of a home, projecting retirement expenses, or evaluating whether a long-term savings vehicle keeps pace with rising prices, understanding inflation's compounding effect is essential for making sound financial decisions across every stage of life.
If your salary grows at 3% and inflation is 4%, you're getting a pay cut every year. Inflation calculators help you set realistic savings goals, negotiate fair raises, and understand the true cost of long-term expenses like college, retirement, and healthcare. Ignoring inflation means planning with numbers that quietly lose value every year.
Future Value = Present Value × (1 + Inflation Rate)^Years Present Value = Future Value / (1 + Inflation Rate)^Years Purchasing Power Lost = Present Value − (Present Value / (1 + rate)^years) Total Inflation = ((1 + rate)^years − 1) × 100%
Result: Future cost: $180.61 | Purchasing power of $100 drops to $55.37
$100 at 3% annual inflation for 20 years: Future value = $100 × 1.03^20 = $180.61. This means an item costing $100 today will cost $180.61 in 20 years. Conversely, $100 saved today will only buy $55.37 worth of today's goods in 20 years if uninvested.
Not all prices inflate equally. Education costs have risen ~8% annually for decades. Healthcare inflation runs 5-6%. Housing varies by market (2-10% in hot markets). Technology tends to deflate (computers get cheaper). Your personal inflation rate depends on your spending mix.
Divide 72 by the inflation rate to get the price-doubling time. 72 / 3% = 24 years. 72 / 6% = 12 years. This simple rule helps gauge inflation's impact over time. At 3% inflation, a $200K house becomes $400K in 24 years, and at 6% it doubles in just 12.
Nominal returns are what you see in your brokerage account. Real returns subtract inflation. A 10% stock market return with 3% inflation is really 7% in purchasing power gains. Always think in real terms for long-term planning. A savings account paying 4% with 3% inflation gives only 1% real return.
US historical average is about 3.3% (1913-present). The Fed targets 2%. Recent years saw 7-9% (2021-2022) before moderating to 3-4%. For long-term planning, 2.5-3% is a reasonable assumption. Healthcare and education inflation run 5-8% annually.
Dramatically. If you need $50K/year in today's dollars and retire in 25 years at 3% inflation, you'll need $105K/year in future dollars. Your retirement nest egg must be 2× what it seems. Always plan retirement in inflation-adjusted (real) dollars.
Three main drivers: (1) Demand-pull: too much money chasing too few goods. (2) Cost-push: rising input costs (energy, materials, labor) push prices up. (3) Monetary: excessive money supply growth. Often it's a combination of all three.
Mild deflation sounds good (falling prices), but sustained deflation is economically devastating. Consumers delay purchases expecting lower prices, businesses cut production and jobs, incomes fall, and debt burdens increase in real terms. The Great Depression involved severe deflation.
Invest in assets that outpace inflation: stocks (7% real return historically), real estate, TIPS bonds, I-Bonds. Avoid holding excess cash. Negotiate salary increases at or above inflation annually. Own appreciating assets rather than depreciating ones.
Divide 72 by the inflation rate to find how many years it takes prices to double. At 3%, prices double in 24 years. At 6%, only 12 years. At 9%, just 8 years. This quick mental math shows how rapidly inflation compounds.