Inflation Calculator

They're the same compounding relationship viewed from opposite directions. Future Cost Equivalent tells you how many future dollars it will take to buy what your Current Amount buys today -- it grows with inflation. Purchasing Power of Current Amount tells you how much your Current Amount, held as-is with no growth of its own, will actually be worth in real terms after that many years of inflation -- it shrinks. A dollar sitting in a 0% account experiences exactly the Purchasing Power decline shown here.

Total Inflation is a percentage -- the cumulative growth rate of prices over the period -- and percentages are, by definition, independent of the starting dollar figure. Whether you enter $500 or $500,000 as the Current Amount, a 3% annual rate over 10 years produces the same roughly 34% total inflation, because the ratio of ending value to starting value depends only on the rate and the years, not on what the starting value happens to be.

More than most people expect, because compounding amplifies small rate differences over long horizons. At this calculator's default $1,000 starting amount, moving the rate from 3% to 4% over 20 years raises the future cost equivalent from roughly $1,806 to about $2,191 -- a difference of about $385 from a single point of annual rate, illustrating why even modest-looking inflation assumptions matter a great deal for long-term financial planning.

The U.S. long-run average, based on the Consumer Price Index, is commonly cited in the 2-3% per year range over recent decades, though any specific year can run well above or below that average, and this calculator cannot verify what the true rate will be for a period that hasn't happened yet. Using a conservative, higher-than-recent rate is a common practice in retirement and long-term planning specifically to avoid under-budgeting for the erosion of purchasing power.