Finance
Inflation Calculator
See how inflation erodes your purchasing power over time. Find out what your money will be worth in the future and how much you'll need to maintain today's lifestyle.
Enter your details and click Calculate
Future Equivalent Cost
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How is this calculated?
Formula: Compound inflation over time.
Future Value = Amount × (1 + rate/100)^years
→ What costs $Amount today will cost this much in Y years
Purchasing Power = Amount / (1 + rate/100)^years
→ What $Amount will be worth in Y years (in today's dollars)
Total Inflation = ((1 + rate/100)^years − 1) × 100%Calculation history
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FAQ
Frequently asked questions
What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises over time, eroding purchasing power. If inflation is 3% per year, something that costs $100 today will cost $103 next year. Central banks typically target 2-3% annual inflation as healthy for economic growth.
What is the average inflation rate?
In the United States, historical average inflation has been about 3.3% per year since 1914. In recent decades (2000-2020), it averaged closer to 2.1%. India averages around 5-6%. Rates vary significantly by country, time period, and economic conditions.
How can I beat inflation with my savings?
To beat inflation, your investment returns must exceed the inflation rate. Options include: equity index funds (historically 7-10% returns), real estate, inflation-protected securities (TIPS/I-Bonds), and diversified portfolios. Keeping money in a savings account earning 0.5% while inflation is 3% means you lose purchasing power each year.
What is the difference between nominal and real returns?
Nominal return is the raw percentage gain on an investment before adjusting for inflation. Real return = nominal return minus inflation rate. For example, if your investment earns 8% and inflation is 3%, your real return is approximately 5%. Always consider real returns when evaluating long-term investments.
How does inflation affect retirement planning?
Inflation significantly impacts retirement because your expenses will be much higher in 20-30 years. A $50,000 annual expense today becomes ~$90,000 in 20 years at 3% inflation. This is why retirement calculators adjust for inflation and why your savings must grow faster than inflation to maintain purchasing power.