Inflation Calculator - Calculate Purchasing Power Over Time

What Is Inflation?

Inflation is the rate at which the general level of prices for goods and services rises, causing purchasing power to fall. When inflation occurs, each unit of currency buys fewer goods and services than it did in previous periods.

How Inflation Affects Your Money

The impact of inflation compounds over time, meaning that even modest inflation rates can significantly reduce purchasing power over extended periods. For example, with a 3% annual inflation rate, $100 today would have the same purchasing power as approximately $74 in 10 years.

What Is the Formula for Calculating Inflation?

Future Value = Present Value × (1 + Inflation Rate)^Number of Years

Past Value = Present Value ÷ (1 + Inflation Rate)^Number of Years

Real Purchasing Power = Nominal Value ÷ (1 + Inflation Rate)^Time Period

How Does $1,000’s Purchasing Power Change Over 10 Years?

$1,000.00 today would require $1,410.60 to maintain equivalent purchasing power after 10 years with an annual inflation rate of 3.5%.

$1,000.00 today had the same purchasing power as $708.92 from 10 years ago, assuming an annual inflation rate of 3.5%.