Inflation Calculator

The formula

Future cost = amount × (1 + inflation)^years. Purchasing power of an amount after the same period is amount ÷ (1 + inflation)^years: how much of today's buying power it keeps. Looking backwards, what today's amount was worth years ago = amount ÷ (1 + inflation)^years.

Worked example

Something that costs 100 today will cost 100 × 1.03^10 = 134.39 after 10 years at 3% inflation. At 2.5% over 20 years it will cost 163.86. Going the other way, 134.39 today corresponds to 100 ten years ago at 3% a year.

Limitations

Real inflation changes every year and differs between goods and countries. This uses one constant average rate. For historical comparisons, official consumer price index figures are more precise.

Using both modes

Enter 1,000 with 3% inflation over 10 years. In future mode, the same goods will cost 1,343.92, a total price increase of 34.39%, and 1,000 will have the purchasing power of only 744.09 in today's money. In past mode with the same inputs, today's 1,000 matches 744.09 ten years ago, again a 34.39% rise in prices since then.

Real return versus nominal return

Inflation eats into investment gains, so the return that matters is the real one. An investment earning 6% in a year with 3% inflation grows your buying power by (1.06 ÷ 1.03) − 1 = 2.91%, not 3%. The shortcut of simply subtracting 3 from 6 is close at low rates but drifts further off as rates rise.

A longer horizon

250 at 5% a year over 20 years: goods that cost 250 now cost 663.32 then, a total rise of 165.33%, and 250 of today's money would buy only what 94.22 buys now. In the past mode, 250 today equals 94.22 twenty years ago.

For one year at 3%, 1,000 becomes 1,030.00 and its purchasing power falls to 970.87. A number of years of 0 is rejected with "Please enter valid, positive values."