Inflation Calculator
How inflation changes the value of money over time
At 3% a year, something that costs $1,000 today will cost $1,343.92 in 10 years, and $1,000 kept in cash will buy only $744.09 of today's goods. Prices rising 34.4% and money losing 25.6% are the same event seen from opposite ends, which is why this inflation calculator always shows both. Enter your own amount, rate and years.
Two percentages that describe the same event
At 3% a year for 25 years, prices rise 109.4% and the same dollars lose 52.2% of what they buy. Both are correct. They are not the same number and they never can be, because they divide by different things.
Prices rising is measured against today: what cost $1,000 will cost $2,093.78. Purchasing power lost is measured against the future: your $1,000 will buy what $477 buys now. Working as a purchasing power calculator, the tool prints both so you cannot accidentally quote the flattering one.
The asymmetry catches people out constantly. A 100% price rise is a 50% loss of purchasing power, not 100%. Money can never lose all of its value to a finite rate — it just approaches zero more slowly than headlines suggest.
What inflation does over a working life
| Rate | Years | $1,000 becomes | Prices rise | Purchasing power lost | Money halves in |
|---|---|---|---|---|---|
| 2% | 10 | $1,218.99 | 21.9% | 18% | 35 yr |
| 3% | 10 | $1,343.92 | 34.4% | 25.6% | 23.4 yr |
| 3% | 20 | $1,806.11 | 80.6% | 44.6% | 23.4 yr |
| 3% | 25 | $2,093.78 | 109.4% | 52.2% | 23.4 yr |
| 3% | 30 | $2,427.26 | 142.7% | 58.8% | 23.4 yr |
| 5% | 10 | $1,628.89 | 62.9% | 38.6% | 14.2 yr |
| 5% | 20 | $2,653.30 | 165.3% | 62.3% | 14.2 yr |
| 7% | 10 | $1,967.15 | 96.7% | 49.2% | 10.2 yr |
| 9% | 10 | $2,367.36 | 136.7% | 57.8% | 8 yr |
Read down the 3% block and you see why inflation is described as compounding rather than accumulating. Ten years costs you a quarter of your purchasing power; thirty years costs nearly three-fifths, not three times as much. The damage front-loads.
How long until money halves in value
The halving time is ln(2) ÷ ln(1 + rate), and it is the inflation twin of the rule of 72. At 3% it is 23.4 years; at 5%, 14.2 years; at 9%, almost exactly 8. It is the most portable fact on this page, because it does not depend on the amount at all.
It also reframes the retirement problem usefully. Someone retiring at 65 with a fixed income and a 3% inflation rate will, at 88, be living on half of what they started with. Any plan built on a flat income for thirty years is quietly a plan to halve your standard of living.
Why a salary has to grow just to stand still
The same arithmetic runs in reverse for income. Whatever this calculator says $1,000 becomes is what a $1,000 salary must reach simply to break even. At 3% over ten years that is $1,344 — a 34.4% raise that leaves you exactly where you started.
This is why a 2% annual raise in a 3% inflation environment is a pay cut, and why comparing job offers years apart requires converting both to the same year's money before they mean anything.
Today's money, later
Run the tool the other way for the future value of money you already hold. At 3%, cash left under a mattress buys steadily less:
| Years from now | What $1,000 will buy in today's goods | Lost |
|---|---|---|
| 5 | $862.61 | 13.7% |
| 10 | $744.09 | 25.6% |
| 20 | $553.68 | 44.6% |
| 30 | $411.99 | 58.8% |
| 40 | $306.56 | 69.3% |
3% a year, compounded.
This is the honest case against holding long-term savings in cash, and equally the case for not panicking about a single bad year. Over five years the loss is real but recoverable; over forty it is most of the money.
Choosing a rate you can defend
The rate is the whole answer, and it is the one thing this calculator cannot know. Three approaches, in descending order of rigour:
- Look up the actual figure for the period you care about. For past periods inflation is a measured statistic, not a forecast — official consumer price index data is published and free, and using it turns a projection into a fact.
- Use the central bank target for forward projections. The US Federal Reserve, the European Central Bank and the Bank of England all target around 2%, which makes it the most defensible forward assumption even though realised inflation frequently misses it.
- Run a range, not a number. Try 2%, 3% and 5% and see whether your decision changes. If it does, the decision depends on a forecast nobody can make, which is itself worth knowing.
Where inflation estimates mislead
- Your inflation is not the headline rate. The published figure is a basket average. If your spending is concentrated in housing, childcare, insurance or medical care, your personal rate can differ from it for years at a time.
- A single constant rate over decades never happens. Real inflation arrives in bursts. The compound result over a long span is usually close enough, but a smooth curve overstates how predictable the path was.
- Comparing nominal figures across eras is meaningless. Any salary, house price or ticket price from a past decade has to be converted before it can be compared with today's.
- Inflation is not the same as your cost of living. Prices rising says nothing about whether your income rose too. The two together, not inflation alone, decide whether you are better off.
A projection tool, not financial advice. Results are only as good as the rate you enter.
What the inflation figure assumes
The compounding factor is (1 + rate)years. Future cost is amount × factor; today's money in future terms is amount ÷ factor. Total inflation is (factor − 1) × 100 and purchasing power lost is (1 − 1 ÷ factor) × 100. Halving time is ln(2) ÷ ln(1 + rate).
- No inflation data is built in. The rate is entirely yours. That is deliberate: embedding a price index that is not kept current would be worse than asking, and for past periods the real figure is published and freely available.
- Annual compounding, applied once per year. Monthly compounding of the same nominal rate gives a slightly larger factor; the difference is immaterial next to the uncertainty in the rate itself.
- Both percentages are always shown together, because reporting only the price rise overstates the effect and reporting only the power lost understates it.
- A constant rate is a simplification. Real inflation arrives unevenly, so treat the path as an average rather than a forecast of any individual year.
- Central bank targets of about 2% are cited as a reference point for forward projections, not as a prediction. Realised inflation misses those targets regularly in both directions.
Reviewed September 2026.
Sources, checked
- Consumer Price Index, US Bureau of Labor Statistics. Published inflation for past periods.
- Why does the Federal Reserve aim for inflation of 2 percent over the longer run?, Board of Governors of the Federal Reserve System. The 2% inflation target used as a reference point.
Figures reviewed . Every worked example on this page is checked against the calculator above.
Inflation Calculator: frequently asked questions
How do I calculate the effect of inflation?
Multiply the amount by (1 + rate)^years for future prices, or divide by the same factor for what today's money will buy. At 3% over 10 years, $1,000 becomes $1,343.92 in prices and $744.09 in purchasing power.
Why is purchasing power lost smaller than the inflation percentage?
They use different denominators. Prices rising 109.4% over 25 years at 3% is the same event as money losing 52.2% of its value — one measures against today, the other against the future. A 100% price rise is always a 50% loss of purchasing power.
How long does it take for money to halve in value?
ln(2) ÷ ln(1 + rate). At 2% it is about 35 years, at 3% it is 23.4 years, at 5% it is 14.2 years and at 9% almost exactly 8. It does not depend on the amount.
What inflation rate should I use?
For a past period, look up the published consumer price index figure — it is measured, not forecast. For projections, central bank targets of around 2% are the most defensible starting point, and it is worth running 2%, 3% and 5% to see whether your decision changes.
What raise do I need to keep up with inflation?
Exactly the total inflation figure. At 3% over ten years you need a 34.4% raise just to stand still, which is why a 2% annual raise during 3% inflation is a real-terms pay cut.
Is this the same as compound interest?
It is the same arithmetic pointed the other way — compounding that erodes value rather than building it. That is why the halving time here mirrors the rule of 72 used for investment growth.
Does inflation affect everyone the same way?
No. The headline rate is an average across a basket of goods. Households whose spending is weighted toward housing, childcare, insurance or medical care can experience a materially different rate for years.
Can I use this to compare historical prices?
Yes, if you enter the actual measured inflation for that period rather than a guess. Comparing a nominal figure from a past decade with today's without converting it is meaningless.