Inflation Calculator
Enter an amount, an expected annual inflation rate, and a number of years to see what that amount will cost in the future, and what today's money will really be worth once inflation erodes it.
How this calculation works
Inflation compounds every year, the same way interest does. The calculator first finds the compounding factor f = (1 + rate/100)^years, where rate is the annual inflation rate in percent and years is the number of years it compounds.
Future cost is what today's amount will cost later: futureCost = amount × f. This answers "how much will this same basket of goods cost me in the future?"
Buying power is the reverse: buyingPower = amount ÷ f. This tells you what your current amount will actually be worth, in today's terms, once you spend it years from now — the same number of currency units will buy fewer goods.
Worked example
How 1,000 erodes over time
The table shows what 1,000 units of buying power today shrinks to after various time spans, at a few common inflation rates. Longer horizons and higher rates both compound the effect sharply.
| Years | at 2% | at 3% | at 5% | at 8% |
|---|---|---|---|---|
| 5 | 905.73 | 862.61 | 783.53 | 680.58 |
| 10 | 820.35 | 744.09 | 613.91 | 463.19 |
| 20 | 672.97 | 553.68 | 376.89 | 214.55 |
| 30 | 552.07 | 411.99 | 231.38 | 99.38 |
Why cash under the mattress loses value
Money kept in cash, or in an account paying no interest, does not grow to offset inflation. Every year prices rise, the same pile of cash buys a little less. Over one year this feels negligible; over ten or thirty years it compounds into a very large real loss, exactly as shown in the table above.
This is the core argument for investing rather than hoarding cash for long-term goals: an investment only preserves your buying power if its return at least matches the inflation rate. Anything earning less than inflation is still losing real value, even while the account balance grows in nominal terms.
Nominal vs. real returns
- Nominal return: the percentage growth shown on your statement, before accounting for inflation.
- Real return: nominal return minus inflation — what you actually gained in buying power.
- A savings account paying 2% while inflation runs at 5% has a real return of roughly −3%: you are losing ground even as the balance rises.
- Compare an investment's expected real return, not just its nominal rate, when deciding whether it beats inflation.
Planning with an inflation estimate
Because future inflation cannot be known in advance, it is common practice to run this calculator with a few different rates — a conservative low estimate, your country's historical average, and a higher stress-test rate — to see a plausible range rather than a single number. This is especially useful for long-term goals like retirement planning, where even a one or two percentage point difference in assumed inflation compounds into a very different outcome over several decades.