trending_up Inflation Calculator (Custom Rate) star

How the Numbers Are Calculated

The calculator applies simple compound growth: future price = amount × (1 + r)ⁿ, where r is your chosen annual inflation rate and n is the number of years. Purchasing power runs the same formula in reverse — real value = amount ÷ (1 + r)ⁿ — showing what your money's current buying power shrinks to once prices have moved by that same factor. Cumulative inflation over the period is (1 + r)ⁿ − 1, expressed as a percentage.

Worked example: $10,000 at a steady 6% annual inflation rate over 10 years. Future price: 10,000 × (1.06)¹⁰ ≈ $17,908 — that is what today's $10,000 basket of goods will cost in a decade. Purchasing power: 10,000 ÷ (1.06)¹⁰ ≈ $5,584 — that is what your $10,000, held as cash with no return, will actually be able to buy in ten years' worth of today's prices. Cumulative inflation over the period: (1.06)¹⁰ − 1 ≈ 79.1% — notice this is far more than simply 6% × 10 = 60%, because each year's inflation compounds on top of the last.

A quick sanity check for any of these numbers is the Rule of 72: divide 72 by the annual inflation rate to estimate how many years it takes for a sum's purchasing power to fall by half. At 6% inflation, 72 ÷ 6 ≈ 12 years — and indeed, by year 12 in the example above purchasing power has already fallen to roughly half its starting value. At 3% inflation the halving time roughly doubles to 24 years; at 12% it roughly halves to 6 years. It is only an approximation — the exact halving time is ln(0.5) ÷ ln(1+r) — but it is accurate enough to gauge how serious a given inflation rate really is without reaching for a calculator.

What the Rate Does and Doesn't Represent

The rate is entered manually on purpose. Official consumer price index (CPI) figures differ by country, by the basket of goods used, and by time period, and the "right" number depends on your question — last year's official reading, a central bank's inflation target, a personal worst-case scenario, or your own household's spending pattern. There is no single universal inflation rate to auto-fill, so the tool stays honest by asking you to supply the assumption and doing the compounding exactly.

Your personal inflation rate can diverge sharply from the official CPI. A household that spends a large share of its budget on rent in a market where rents are rising faster than the general index will see its real purchasing power erode faster than the headline number suggests; a household that spends heavily on categories with falling prices (electronics, for instance) may erode more slowly. If you want your own realistic estimate, weight the price changes of your actual major expenses instead of using the national average unchanged.

Compounding is also why long horizons look dramatic and short ones look mild: at 10% inflation, one year erodes purchasing power by less than a tenth, but thirty years compounds to roughly (1.10)³⁰ ≈ 17.4× the original price — a number that surprises most people the first time they see it. The year-by-year table exists for the same reason: watching purchasing power erode gradually, rather than jumping straight to a 10- or 30-year total, makes the compounding effect intuitive. Past average inflation rates are not a guarantee of future rates; treat every projection here as a scenario to explore, not a forecast. This calculator does not constitute financial advice.