Inflation Calculator
Free inflation calculator: see how much a sum will cost in the future and how much purchasing power your money loses over time at any annual inflation rate.
Updated 2026-06-14 · Free · No sign-up · Runs privately in your browser
Show the formula & steps
How the Inflation Calculator Works
This calculator shows the long-term effect of inflation in two directions: how much more a purchase will cost in the future, and how much buying power today’s money loses over the same period. Enter an amount, an annual inflation rate, and a number of years.
How it works
Inflation compounds like interest. The core formula is:
Inflation factor = (1 + annual rate)^years Future cost = amount × inflation factor Buying power = amount ÷ inflation factor
The future cost tells you how many dollars you will need later to buy the same basket of goods. The buying-power figure tells you what your fixed sum will actually purchase in the future.
Worked Example
Suppose you want to know the effect of 3% inflation on $1,000 over 10 years:
- Inflation factor = 1.03^10 = 1.3439
- Future cost = 1,000 × 1.3439 = $1,343.92
- Buying power = 1,000 ÷ 1.3439 = $744.09, a 25.6% loss of value
So a basket that costs $1,000 today will cost about $1,344 in a decade, and $1,000 held in cash will buy only about $744 worth of those goods.
Inflation Over Time at 3%
| Years | $1,000 becomes (cost) | Buying power of $1,000 |
|---|---|---|
| 5 | $1,159 | $863 |
| 10 | $1,344 | $744 |
| 20 | $1,806 | $554 |
| 30 | $2,427 | $412 |
Why This Matters for Planning
- Cash loses value. Money sitting idle quietly shrinks in real terms every year.
- Goals need inflation built in. A $50,000 goal 20 years out really needs far more nominal dollars.
- Returns must beat inflation. An investment only grows your wealth in real terms if its return exceeds the inflation rate.
Frequently asked questions
How does inflation reduce the value of money?+
Inflation raises prices over time, so the same dollar buys less each year. At 3% annual inflation, something that costs $100 today costs about $134 in 10 years, meaning your $100 has lost roughly a quarter of its purchasing power.
How do I calculate the future cost of something with inflation?+
Multiply today's price by (1 + inflation rate) raised to the number of years. For $1,000 at 3% over 10 years, that is 1,000 × 1.03^10 = about $1,344. This compounds each year, just like interest.
What inflation rate should I use?+
Central banks often target around 2% to 3% a year, and the long-run US average is roughly 3%. For planning, 3% is a reasonable default; use a higher figure if you want a more conservative estimate during high-inflation periods.
What is the difference between future cost and lost purchasing power?+
Future cost is how many more dollars you will need to buy the same thing later. Lost purchasing power is the flip side: how much less today's fixed amount of money will buy in the future. This tool shows both.
Does this calculator use real historical inflation data?+
No. It uses a single annual rate that you enter, so it works for any country or time period without relying on a fixed data table. For historical comparisons, look up the average inflation rate for your dates and enter it.