Inflation calculator
Purchasing power of a sum after several years, and how much is lost.
Fill in the fields and the result will appear here automatically.
Shows two sides of changing prices: what an unchanged cash amount can buy later, and how much future cash would buy today’s basket. With a constant 8% annual price rise, prices become 2.1589 times higher over ten years, so purchasing power falls by 53.68%, rather than 80%. The price level compounds; the cash balance is not reduced by 8% each year. The entered rate is a scenario, not a forecast or a downloaded index.
How it works
Formula and logic
For annual inflation p in percent, duration t in years and amount A: price factor F = (1+p/100)^t; purchasing power = A/F; future cost of today’s basket = A×F. Loss = A−A/F and share lost = (1−1/F)×100%. Fractional years are used without rounding. Inflation must exceed −100%. Deflation produces a negative loss, meaning a purchasing-power gain. All amounts use one currency; no exchange rate is applied.
Example
100,000 at 8% inflation over 10 years keeps the purchasing power of only 46,319.35 — a loss of 53.68%. With zero inflation, purchasing power and the future basket cost equal the starting amount, with no loss.
Fields and units
- Amount today — $
- Inflation, % per year — unitless
- Term, years — years
How to use
- — Enter the amount in today's money.
- — Enter the expected annual inflation.
- — Enter the term in years.
- — The rate is your assumption, not a forecast.
Method and limitations
- Calculation method
- Formula and logic
- Data or methodology source
- BLS, United States: purchasing power and the price-index ratio BLS, United States: average indices and individual baskets can differ
- Limitation
- Constant entered inflation and an unchanged balance with no earnings. Changing yearly rates, personal spending weights, taxes, investment returns and exchange rates are not modelled. Results beyond numeric precision produce an error.
FAQ
Why isn't 8% over 10 years equal to 80%?
Prices multiply by 1.08 each year. After ten years, 100,000 divided by 1.08^10 is 46,319.35 in today’s prices, a 53.68% loss.
How do «purchasing power» and «the same in future money» differ?
They are two sides of the same factor. The first says what today's 100,000 will buy later; the second says how many future units it would take to buy what 100,000 buys now.
Should I use the official index or my own estimate?
Use an index matching the basket and period, or an explicit assumption for a future scenario. An average consumer index may differ from your spending pattern; a personal estimate is not automatically a better forecast.
Can I enter negative inflation?
Yes, above −100%. At −20% for two years, the price factor is 0.64: 100 monetary units retain purchasing power of 156.25, with a loss of −56.25.
How do I protect money from inflation?
This calculation does not advise and cannot. It only shows the scale of the loss; which instruments suit you depends on your horizon, risk tolerance and circumstances.