Inflation Calculator
Inflation silently erodes the purchasing power of money. $100,000 today is not worth the same as $100,000 in 5 years if annual inflation is 5%. This calculator shows you exactly how much a sum of money stored "under the mattress" will be worth in the future, and how much purchasing power you lose year by year.
Equivalent in the future
Value today
Cumulative loss
Year-over-year loss of value
Projection based on a constant rate. Actual inflation varies year to year.
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How it works
The formula is FV = PV × (1 + r/100)^t, where PV is the present value (money today), r is the annual inflation rate as a percentage, and t is the time in years. The result FV indicates how much money you would need in the future to have the same purchasing power that PV has today. The difference FV − PV represents the purchasing power loss in monetary terms. A concrete example makes it click: suppose a weekly grocery basket costs $100 today and inflation runs at a steady 4% a year. In ten years that same basket will cost $148.02, so you would need almost half as much money again just to fill the same cart. Turned around, the $100 note you keep in a drawer will buy in ten years only what $67.56 buys today — a 32.44% loss of purchasing power without you spending a cent. Nothing about the money changed; the prices around it did.
What $100 in cash really buys over time
This table shows the purchasing power of a $100 note left untouched, assuming a constant 4% annual inflation. Each year it buys about 4% less than the year before, and the erosion compounds: after a decade the note keeps barely two-thirds of its original value. This is why money sitting idle in cash is not "safe" — it loses value quietly and relentlessly while the number on the note stays the same.
| Years | What $100 can buy at 4% |
|---|---|
| 0 | 100.00 |
| 1 | 96.15 |
| 2 | 92.46 |
| 3 | 88.90 |
| 4 | 85.48 |
| 5 | 82.19 |
| 6 | 79.03 |
| 7 | 75.99 |
| 8 | 73.07 |
| 9 | 70.26 |
| 10 | 67.56 |
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Preguntas frecuentes
- What is inflation and how does it affect my savings?
- Inflation is the general and sustained increase in prices. If annual inflation is 5% and you have $100,000 in cash, the following year you will need $105,000 to buy the same things. Your $100,000 will have lost purchasing power in real terms.
- How do I protect my savings from inflation?
- The most common tools are: high-yield savings accounts with rates above inflation, inflation-linked bonds (TIPS in the US), stocks in companies that pass inflation on to prices, real estate, and foreign currency assets. The goal is for your investment return to exceed the inflation rate.
- What is cumulative inflation?
- It is the total impact of inflation over several years. It is not the sum of annual rates, but the compound product. If inflation was 5% in year 1 and 6% in year 2, the cumulative inflation is (1.05 × 1.06 − 1) × 100 = 11.3%, not 11%.
- Where can I find the official inflation rate for my country?
- In the US: Bureau of Labor Statistics (bls.gov). In the UK: Office for National Statistics. In the EU: Eurostat. In Canada: Statistics Canada. Central banks of each country also publish inflation projections for coming years.
- Can I use this calculator to adjust rental prices?
- Yes, as an estimate. Rental contracts often use specific indices (CPI, for example) rather than general inflation. You can use this calculator as an approximation by entering the expected inflation for the lease period.
- What is the difference between nominal and real value?
- The nominal value is the number printed on the money — 1,000 is 1,000 regardless of the year. The real value is that amount adjusted for inflation, that is, what it can actually buy. If your salary rises 3% but inflation is 5%, your nominal salary went up yet your real salary fell by roughly 2%: you earn more money but can buy less with it.
- What is deflation and why does it worry economists?
- Deflation is negative inflation: prices fall over time and money gains purchasing power. It sounds good for a saver, but it is dangerous for the economy, because people postpone purchases waiting for lower prices, consumption stalls, companies cut production and jobs, and debts become heavier in real terms. Central banks usually target a small positive inflation (around 2%) rather than zero for exactly this reason.