Inflation Calculator
Calculate the purchasing power of money over time. See what today's dollars will be worth in the future, or what past prices are worth in today's dollars, using any annual inflation rate.
Formulas, assumptions, and rounding are documented in our calculator methodology.
What are you calculating?
Equivalent Future Cost
$1,343.92
$1,000.00 today buys this much in 10 years
$1,000.00
Today's Value
$343.92
Purchasing Power Lost
$1,343.92
Equivalent Future Cost
Purchasing Power
This calculator uses a fixed annual inflation rate. Actual inflation varies year to year. The U.S. Federal Reserve targets approximately 2% annual inflation. Historical U.S. inflation has averaged roughly 3-4% over the past century.
Inflation Calculation Formula
Future equivalent = Present value × (1 + inflation rate)^years. Past equivalent (today's dollars) = Past value ÷ (1 + inflation rate)^years. Example: $500 in 1994 at 3% average inflation = $500 × (1.03)^30 = $1,213 in 2024 — meaning $500 in 1994 had the buying power of about $1,213 today.
Real vs. Nominal Returns
When evaluating investments, always compare the nominal return (stated rate) to inflation to find the real return: Real return ≈ Nominal return − Inflation rate. A 6% nominal return with 3% inflation gives approximately a 3% real return. Use the Rule of 72 to estimate doubling time: at 3% inflation, money's purchasing power halves in roughly 72 ÷ 3 = 24 years.
Common US Inflation Reference Points
Average annual US CPI inflation by decade: 1980s ~5.1%, 1990s ~3.0%, 2000s ~2.6%, 2010s ~1.8%, 2020–2023 ~5.1% (pandemic spike). The Federal Reserve's target is 2%. For retirement planning covering 30+ years, using 2.5–3.5% is generally conservative and reasonable for long-term projections.
Frequently Asked Questions
- Inflation is the rate at which prices in an economy rise over time, reducing the purchasing power of money. At 3% annual inflation, $100 today buys the same goods as roughly $134 in 10 years — or, from the other direction, $100 in 10 years will only buy what $74 buys today.
- The U.S. Federal Reserve targets 2% annual inflation. Historical average U.S. CPI inflation has been roughly 3–4% over the past century. For conservative long-term planning, use 2–3%. For recent high-inflation scenarios, use 4–6%. Avoid using short-term spikes (like 8% in 2022) for long-term projections.
- Using compound interest formula: Future Value = Present Value × (1 + rate)^years. At 3% inflation over 10 years, $1,000 today would need to be $1,344 in 10 years to maintain the same buying power. The purchasing power loss is $344 (or 25.6% of the future amount).
- Nominal value is the face amount in current dollars (not adjusted for inflation). Real value is adjusted for inflation and represents true purchasing power. If your savings earn 5% nominal but inflation is 3%, your real return is only about 2%. Always compare investment returns to inflation when planning for retirement or long-term goals.
- Inflation erodes the real value of fixed savings over time. $1 million saved today at 3% inflation would only have the purchasing power of about $744,000 in 10 years, or $412,000 in 30 years. This is why retirement calculators include an inflation adjustment — to show real (inflation-adjusted) projected balance alongside nominal balance.