Finance & Loan
Inflation Calculator
See what today’s money will be worth later — or what something will cost by the time you get there.
Inflation Calculator
About the Inflation Calculator
Inflation quietly changes what money is worth. This calculator answers the question in three directions: what something will cost in future, what today's money will buy in future, and what rate is implied by two amounts you already know.
Those first two are different questions and people mix them up constantly. If prices rise 3% a year for 20 years, a £100 item will cost £181 — but £100 kept under the mattress will only buy what £55 buys today. The tool separates them and labels each clearly.
It projects forward from a rate you supply. It does not look up historical index figures, and the page is explicit about that.
How to use the Inflation Calculator
- Choose what you want to work out — future cost, lost buying power, or the rate between two known amounts.
- Enter the amount today.
- Enter the yearly inflation rate, or in rate mode the amount later.
- Enter the number of years to run it over.
- Select Calculate. Future cost and buying power are exact inverses of each other.
The inflation formula: three ways to calculate it
Future cost : FV = PV × (1 + r)t
Buying power : PP = PV ÷ (1 + r)t
Implied rate : r = (FV ÷ PV)1/t − 1
PV = today's amount, r = annual inflation rate, t = years.
Worked example
Something costing £100 today, with 3% annual inflation for 20 years.
Future cost: 100 × 1.0320 = 100 × 1.8061 = £180.61
Buying power: 100 ÷ 1.8061 = £55.37
The item costs 81% more — your money buys 45% less
Both describe the same 3% inflation. They are not the same percentage because one divides and the other multiplies — which is exactly the confusion this tool is built to remove.
Future cost and buying power are mirror images
| Years at 3% | £100 will cost | £100 will buy | Value lost |
|---|---|---|---|
| 5 | £115.93 | £86.26 | 13.7% |
| 10 | £134.39 | £74.41 | 25.6% |
| 20 | £180.61 | £55.37 | 44.6% |
| 30 | £242.73 | £41.20 | 58.8% |
| 40 | £326.20 | £30.66 | 69.3% |
Notice that the loss in buying power is always smaller in percentage terms than the rise in cost. A 100% price rise halves your buying power — a 50% loss, not 100%. Getting this backwards is the most common inflation error there is.
What rate should you use?
Central banks in most developed economies target around 2%, and long-run historical averages sit somewhat higher. Useful reference points:
| Rate | Money halves in value in | Reasonable for |
|---|---|---|
| 2% | About 35 years | Central bank target |
| 2.5% | About 28 years | A cautious long-run planning figure |
| 3% | About 23 years | Long-run historical average in many economies |
| 5% | About 14 years | An elevated-inflation scenario |
| 10% | About 7 years | High inflation |
For long-range planning, running your figures at two or three rates is more useful than agonising over one. If a plan only works at 2% and fails at 3.5%, that fragility is worth knowing about now.
Headline inflation is an average across a basket of goods, and your personal rate may differ substantially. Housing, energy, education and healthcare have often risen faster than the headline figure; consumer electronics have frequently fallen. If most of your spending sits in one fast-rising category, use a higher rate.
Does this use real historical data?
No. This calculator projects at a constant rate you supply. It contains no historical price index, so it cannot tell you what £100 in 1975 is worth today from actual recorded inflation.
For that you want an official index-based tool: the US Bureau of Labor Statistics CPI calculator or the Bank of England inflation calculator, both of which use recorded index values rather than an assumed average. Use this tool for forward projection; use those for historical fact.
Working out an implied rate
If you know two amounts and the time between them, the tool solves for the rate. A weekly shop that cost £80 five years ago and costs £98 now implies (98÷80)1/5 − 1 = 4.14% a year.
The same arithmetic works for any compound growth — a salary, a house price, a subscription. It is simply the compound annual growth rate under a different name.
Inflation and your savings
The number that matters is the real return: your interest rate minus inflation. Savings at 4% while inflation runs at 3% gain roughly 1% a year in real terms. At 2% interest with 3% inflation, you are losing about 1% a year in buying power even though the balance is rising.
This is why a nominal growth figure can flatter. Project your savings with the compound interest calculator, then bring the result back to today's money here.
This is a calculation aid, not financial advice. It does not know your circumstances, and nothing here is a quote, an offer or a recommendation. Rates, fees, tax rules and lending regulations change constantly and differ by country and provider. Before committing to anything, get figures in writing from the provider and, where the amounts matter to you, take advice from a qualified adviser who knows your situation.
CPI inflation rate formula
Governments measure inflation with a price index. In the US it is the Consumer Price Index (CPI), published each month by the Bureau of Labor Statistics. To find inflation between two dates, compare the index values.
Inflation rate = (CPI later − CPI earlier) ÷ CPI earlier × 100
Worked example
US CPI-U averaged 258.811 in 2020 and 313.689 in 2024.
(313.689 − 258.811) ÷ 258.811 × 100 = 21.2%.
Prices rose about 21.2% from 2020 to 2024
So something that cost $100 in 2020 cost about $121 in 2024, on average.
To turn a total change into a yearly rate, pick The inflation rate between two amounts above. Enter 100 and 121.2 over 4 years and you get about 4.9% a year.
Wage inflation calculator: calculate wage inflation for your pay
A raise only helps if it beats inflation. Here is a quick way to check:
- Choose What it will cost in future.
- Enter your old salary, the inflation rate, and the years since then.
- Compare the answer with your salary today.
Say you earned $50,000 four years ago and inflation averaged 4.9%. Your pay needs to be about $60,600 today just to buy the same things. If you now earn $55,000, your real pay has fallen, even though the number went up.
Investment calculator with inflation: real returns
An investment's real return is what is left after inflation. Use this formula rather than simple subtraction:
Real return = (1 + nominal return) ÷ (1 + inflation) − 1
A 7% return with 3% inflation gives (1.07 ÷ 1.03) − 1 = 3.9% real growth. Plug that real rate into the compound interest calculator to see your savings in today's money.
What $100 from past years is worth today
This tool projects forward at a rate you choose. For a quick look back, here is what $100 in past years equals in 2024 dollars, using US CPI-U annual averages from the Bureau of Labor Statistics.
| Year | CPI-U (annual average) | $100 then is worth in 2024 |
|---|---|---|
| 1913 | 9.9 | about $3,169 |
| 1920 | 20.0 | about $1,568 |
| 1930 | 16.7 | about $1,878 |
| 1940 | 14.0 | about $2,241 |
| 1950 | 24.1 | about $1,302 |
| 1960 | 29.6 | about $1,060 |
| 1970 | 38.8 | about $808 |
| 1980 | 82.4 | about $381 |
| 1990 | 130.7 | about $240 |
| 2000 | 172.2 | about $182 |
| 2010 | 218.1 | about $144 |
| 2020 | 258.8 | about $121 |
So a 1960 inflation calculator answer is simple: $1 in 1960 is about $10.60 in 2024.
Notice 1930 and 1940: prices fell during the Great Depression, so $100 from 1940 buys more today than $100 from 1930. For any other year or month, use the CPI inflation rate formula above with index values from the BLS website. Years before 1913 have no official CPI, so figures for the 1800s rely on historical estimates.
Real interest rate formula
The real interest rate tells you how fast your money grows after inflation. The exact version is called the Fisher equation:
Real rate = (1 + nominal rate) ÷ (1 + inflation rate) − 1
Quick estimate: real rate ≈ nominal rate − inflation rate
A savings account paying 5% with 3% inflation has a real rate of (1.05 ÷ 1.03) − 1 = 1.94%. The quick estimate says 2%, which is close enough for most decisions.
Inflation rate using the GDP deflator
Economists also measure inflation with the GDP deflator. It covers everything the economy produces, not just what consumers buy, so it often differs slightly from CPI.
GDP deflator = nominal GDP ÷ real GDP × 100
Inflation rate = (deflator this year − deflator last year) ÷ deflator last year × 100
If the deflator rises from 120 to 123.6, inflation is 3.6 ÷ 120 × 100 = 3%.
Future value of money and retirement planning
Planning for retirement? Inflation decides what your savings will really buy. Pick What it will cost in future and enter today’s yearly spending. At 3% inflation, $50,000 of spending today needs about $121,000 a year in 30 years. That figure — not today’s — is the one a retirement calculator with inflation should aim for.
The future cost option is also a handy inflation future value calculator and future dollar value calculator. This tool works in any currency — enter your own country’s rate to use it as a euro, yen, rupee or Canadian inflation calculator.
Going the other way, the What today’s money will be worth option works as a future purchasing power calculator: it shows what a future sum is worth in today’s money.
Other ways to use this calculator
- Cost of living calculator — project how much living costs will rise at a chosen inflation rate.
- How to calculate inflation — use the CPI formula above, or the rate option for two known prices.
Frequently asked questions
Rising prices mean each unit of currency buys less. Divide rather than multiply: at 3% inflation for 20 years, £100 buys what £55.37 buys today — a 44.6% loss. Note the asymmetry: prices rise 81% over the same period. A 100% price rise halves your buying power, a 50% loss rather than 100%, and getting that backwards is the commonest inflation mistake.
Most central banks target around 2%, and long-run historical averages in many economies sit nearer 3%. For cautious long-term planning, 2.5% to 3% is reasonable. Better still, run your figures at two or three rates — if a plan works at 2% but fails at 3.5%, that fragility is worth discovering now rather than in twenty years.
Future cost asks what an item will cost later, and multiplies: £100 becomes £180.61 after 20 years at 3%. Buying power asks what today's money will be worth later, and divides: £100 becomes £55.37. Both describe the same inflation from opposite ends, which is why the percentages differ — 81% more expensive, 44.6% less valuable.
No. This calculator projects forward at a constant rate you supply; it holds no historical price index. For actual recorded inflation between two past dates, use an official index-based tool such as the US Bureau of Labor Statistics CPI calculator or the Bank of England inflation calculator. Use this one for forward projection and scenario planning instead.
Inflation rate = (later price index − earlier price index) ÷ earlier price index × 100. Using US CPI, prices rose from 258.811 in 2020 to 313.689 in 2024, an increase of about 21.2%.
Divide 1 plus the nominal return by 1 plus inflation, then subtract 1. A 7% return with 3% inflation gives a real return of about 3.9%. Simply subtracting gives 4%, which slightly overstates it.
Inflation rate = (price index later minus price index earlier) divided by price index earlier, times 100. To project a future cost use FV = PV times (1 + r) to the power t, and to find today’s value of a future sum divide by (1 + r) to the power t instead.
Divide 1 plus the nominal rate by 1 plus the inflation rate and subtract 1. At 5% interest and 3% inflation the real rate is 1.05 divided by 1.03, minus 1, which is about 1.94%. Subtracting inflation from the rate gives a close estimate.
About $1,060 in 2024 dollars, based on US CPI-U annual averages of 29.6 in 1960 and 313.7 in 2024. Prices rose roughly tenfold over that period.
Sources and further reading
- US Bureau of Labor Statistics — CPI inflation calculator — official historical US inflation, which this tool does not replicate
- Bank of England — Inflation calculator and target — the UK 2% target and historical index data
- US Bureau of Labor Statistics — Consumer Price Index — how the headline inflation basket is constructed
- Office for National Statistics — UK inflation and price indices — UK CPI methodology and published rates
- US Bureau of Labor Statistics — Consumer Price Index — official CPI data and tables