Inflation & Purchasing Power Calculator
Inflation means the same amount of money buys less over time as prices rise. This calculator shows two sides of that: what a today-priced item will cost in the future, and what a today’s amount will be worth in real terms after inflation.
Enter an amount, an average annual inflation rate (2–3% is typical in many economies), and a number of years. The result shows the inflated future cost and the eroded real value.
It is useful when pricing a future goal — a child’s tuition, a retirement target — or when checking whether your savings rate is really keeping up with prices.
Enter your values to see the result.
How this is calculated
Inflation is the rate at which general prices rise, eroding what a fixed amount of money can buy. This calculator shows two sides of the same coin. The future cost of goods that cost a given amount today is amount × (1 + rate)^years, where the rate is the annual inflation rate as a decimal. The real value of today’s amount after the same period is amount ÷ (1 + rate)^years, and the purchasing-power loss is the percentage gap between the two.
A 3% inflation rate roughly halves purchasing power over 24 years, because prices double while the nominal amount stays the same. That is why money held in cash loses real value unless it earns at least the inflation rate.
The model assumes a constant average inflation rate over the whole period. It does not capture category-specific inflation (healthcare and education often rise faster than the headline rate), deflation, wage growth, or the compounding effect on salaries. Use a recent local average for your currency; many developed economies target around 2% long-run, while higher-volatility economies warrant a higher assumption.
Worked example
$1,000 today, 3% annual inflation, 20 years.
- 1Future cost of the same goods = 1,000 × 1.03^20 = 1,000 × 1.806 = $1,806.
- 2Real value of today’s $1,000 after 20 years = 1,000 ÷ 1.806 = $554.
- 3Purchasing-power loss = (1 − 554 ÷ 1,000) × 100 = 44.6%.
Frequently asked questions
- What inflation rate should I use?
- Many developed economies target around 2% long-run. Use a local recent average for your currency; higher-volatility economies may warrant a higher assumption.
- Why does my money lose value even when saved?
- If your savings earn less than inflation, their real purchasing power falls. To preserve value, your return needs to at least match inflation.
- Is this the same as the time value of money?
- Related. Inflation reduces real value; investment returns can offset it. The future-value and present-value calculators handle the investment side.
- What inflation rate should I use?
- Many developed economies target around 2% long-run. Use a local recent average for your currency; higher-volatility economies may warrant a higher assumption. For long horizons, a conservative (slightly higher) rate is safer.
- Why does my money lose value even when saved?
- If your savings earn less than inflation, their real purchasing power falls. To preserve value, your return needs to at least match inflation — which is why cash holdings slowly lose ground over decades.
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Method: constant-rate inflation compounding. No external data source. Last updated: September 2026.
These results are indicative estimates for planning only and do not constitute financial advice. Actual loan terms, tax rules, investment returns and product conditions vary by country, provider and your personal circumstances. Always confirm figures with your bank, tax authority or a qualified financial adviser before making decisions.