Inflation Calculator

Inflation quietly rewrites every long-term plan. This calculator converts an amount between years so you can see what a salary, a price or a savings target is worth in real terms — the difference between having a million and having a million that buys what 450,000 buys today.

Inputs

Amount today

Inflation rate(%)

Years

Result

179,084.77

Purchasing power of today's 100,000 falls to 55,839.48

How it works

Future cost = P × (1 + i)^t

How the inflation calculator works

Future cost = present amount × (1 + i)^n, where i is the annual inflation rate and n the number of years.

Past purchasing power runs the same formula in reverse: present value = past amount × (1 + i)^n from the earlier year to now.

Real return = (1 + nominal) ÷ (1 + inflation) − 1. Subtracting the two rates is a decent approximation, but this is the exact form.

Worked example: 1,000,000 target 25 years out at 3% inflation

Multiplier: 1.03^25 = 2.094.
So 1,000,000 in 25 years buys what 1,000,000 ÷ 2.094 = 477,600 buys today.
To have today's million in purchasing power, you need 2,094,000 nominal.
At 5% inflation instead, the multiplier is 3.386 and you would need 3,386,000.
A 7% nominal return against 3% inflation is a real return of 1.07 ÷ 1.03 − 1 = 3.88%.

Common mistakes to avoid

Planning retirement in nominal money

A target set in today's currency and reached in 30 years' currency is not the same target. Inflate the goal or plan in real returns throughout.

Assuming your personal inflation matches the headline rate

Rent, healthcare and education routinely outpace the general index. If your spending is weighted to those, use a higher rate.

Ignoring inflation on fixed-income holdings

A 7% deposit taxed at 30% nets 4.9%. With 6% inflation, the real return is negative even though the balance rises.

Frequently asked questions

What inflation rate should I use for planning?

Long-run averages of 2–3% suit developed markets and 5–6% many emerging ones. Test your plan at a rate two points higher than your base case.

How fast does inflation halve my money?

Divide 72 by the rate. At 6%, purchasing power halves in about twelve years.

Does a salary rise below inflation mean a pay cut?

In real terms, yes. A 4% raise with 6% inflation is a 1.9% reduction in purchasing power.

Which assets historically beat inflation?

Broad equities and real assets have over long periods; cash reliably has not. That is the core argument for investing rather than only saving long-horizon money.