How to use this inflation calculator
- Choose what to work out. Future cost takes a price today and shows what the same thing will cost later. Worth in today’s money takes a sum you will have in the future and shows what it would buy at today’s prices.
- Amount — the price today, or the future sum.
- Inflation rate — the average yearly rise in prices you want to assume. The default is 3%.
- Number of years — how far ahead to look.
The results show the answer, how much prices rise in total over the period (cumulative inflation), and how much buying power each unit of money loses. The chart and the table show every year along the way.
How it’s calculated
Inflation compounds: each year’s rise applies to prices that have already risen. Over n years at a rate r, prices are multiplied by (1 + r)n:
Worked example: $2,500 over 15 years at 3%
With the default inputs, something costs $2,500 today and prices rise 3% a year for 15 years. The growth factor is (1.03)15 = 1.557967, so:
- Future cost: $2,500 × 1.557967 = $3,894.92, which is $1,394.92 more than today.
- Cumulative inflation: 1.557967 − 1 = 55.8%.
- Change in buying power: 1 ÷ 1.557967 − 1 = −35.8%. Each dollar buys about 36% less.
Switch to worth in today’s money and the same $2,500, received 15 years from now, buys what $1,604.65 buys today: $2,500 ÷ 1.557967. That is $895.35 of buying power lost.
| Year | Cost of a $2,500 item | $2,500 in today’s money | Cumulative inflation |
|---|---|---|---|
| 1 | $2,575.00 | $2,427.18 | 3% |
| 5 | $2,898.19 | $2,156.52 | 15.9% |
| 10 | $3,359.79 | $1,860.23 | 34.4% |
| 15 | $3,894.92 | $1,604.65 | 55.8% |
How much the rate matters
Small differences in the rate add up over 15 years. For the same $2,500:
| Inflation rate | Future cost | Worth in today’s money | Cumulative inflation |
|---|---|---|---|
| 2% | $3,364.67 | $1,857.54 | 34.6% |
| 3% | $3,894.92 | $1,604.65 | 55.8% |
| 4% | $4,502.36 | $1,388.16 | 80.1% |
| 5% | $5,197.32 | $1,202.54 | 107.9% |
At 5% prices more than double in 15 years. At 2% they rise by about a third.
A quick check with the Rule of 72
To estimate how long prices take to double, divide 72 by the inflation rate. At 3%, 72 ÷ 3 = 24 years. The exact answer, which the calculator shows as “time for prices to double”, is 23.4 years. The shortcut works the same way for investment growth; see our guide to the Rule of 72.
Real inflation varies
The rate you enter is an assumption, applied evenly every year. Real inflation moves around from one year to the next, and your own rate depends on what you buy: rent, food, fuel and insurance can each rise faster or slower than the average. For past and current figures, use official statistics, such as the Consumer Price Index (CPI) from the US Bureau of Labor Statistics or the inflation figures published by the Office for National Statistics (ONS) in the UK. It is sensible to try more than one rate to see a range of outcomes.
What this calculator does not include
- Interest or investment returns. It shows what prices do to money that doesn’t grow. To see what inflation does to savings that earn interest, read what inflation really does to your savings.
- Year-to-year changes in the rate, or periods when prices fall.
- Taxes, and price changes for particular items that differ from the average.
If you’re saving for a future purchase, work out its future cost here, then plan the deposits with the savings goal calculator. The compound interest calculator shows whether your savings rate keeps up.
Frequently asked questions
What inflation rate should I use?
There is no single right answer. Look at recent official figures for your country, then try a lower and a higher rate. For a long-term plan, a steady average such as the default 3% is a reasonable starting point to test against.
What does “in today’s money” mean?
It converts a future sum into what it would buy at today’s prices. If $2,500 in 15 years is worth $1,604.65 in today’s money, it will buy roughly what $1,604.65 buys now.
Is the change in buying power the same as cumulative inflation?
No. If prices rise 55.8%, a dollar buys 1 ÷ 1.558 of what it did, which is 35.8% less. The loss in buying power is always smaller than the rise in prices.
Does interest on my savings make up for inflation?
Only if the rate you earn after tax is higher than inflation. Your real return is roughly your interest rate minus the inflation rate, so 2% interest during 3% inflation still loses buying power.
Can I save my calculation?
Members can save any calculation and reopen it later from their account. The calculator itself is free for everyone, with instant results and no sign-up. See membership.
Results are estimates for educational purposes and are not financial advice. See our disclaimer.