Enter an amount, a starting and ending year, and an assumed annual inflation rate to see its future or past value and the cumulative inflation over that period.
Inflation questions come in two shapes, and they use the same factor in opposite directions:
Notice those two percentages are not mirror images: prices rose 34.39% but purchasing power fell only 25.59%. They describe the same change from opposite ends, because a rise measured against the smaller starting number is always a larger percentage than the equivalent fall measured against the bigger one. Quoting the wrong one of the pair is one of the most common errors in inflation commentary.
Each year's increase applies to the price level the previous year left behind, not to the original amount — the identical mechanism to compound interest, working against you. Over a decade the difference between compounding and simply multiplying is modest; over a working life it is enormous.
The quickest way to feel the scale is to ask how long it takes for money under the mattress to lose half its purchasing power. At 3%, that is about 23 years. At 7%, about 10 years. The rule of 72 — divide 72 by the rate — gets you to 24 and 10.3 respectively, close enough for mental arithmetic and a useful sanity check on any projection you are handed.
This is where the calculation stops being academic. An investment returning 7% while inflation runs at 3% is not making you 4% better off in any precise sense — the correct adjustment divides rather than subtracts. The real return is (1.07 ÷ 1.03) − 1, which is 3.88%, not 4%. The gap is small over one year and compounds into a meaningful difference over thirty.
The same logic makes a "guaranteed" cash rate below inflation a guaranteed loss in real terms, and it is why a retirement target quoted in today's money has to be inflated to the year you actually retire before it means anything.
This tool applies one constant rate you choose across every year, which is a deliberate simplification — real annual CPI readings have ranged from near zero to over 9% depending on the period, and a historical adjustment would apply each year's actual figure.
More importantly, the published index measures a representative basket, and yours is not that basket. If a large share of your spending goes on rent, tuition or medical care — categories that have persistently outrun the average — your personal inflation rate has been higher than the headline for years. Renters and homeowners can experience very different rates in the same economy. Treat the number here as a scenario to test, not a measurement: run it at a few different rates and see how much your conclusion actually depends on the guess.
This calculator applies one constant inflation rate you choose across every year in the period. Actual inflation, measured by the Consumer Price Index (CPI), varies year to year — some years run well above average, others near zero or even negative — so a real historical adjustment would apply the actual CPI reading for each specific year rather than one smoothed average rate.
US inflation has averaged roughly 3% a year over long historical stretches, which is why that's the default here, but actual annual rates have ranged from near 0% to over 9% depending on the period. There's no single "correct" number to use for a future projection — try a few different rates to see how sensitive your result is to the assumption.
Each year's price increase applies to the already-higher price level left over from the prior year, not back to the original starting amount — exactly the same mechanism as compound interest. Over long periods this compounding is why even a modest annual rate erodes purchasing power far more than simply multiplying the rate by the number of years would suggest.
Inflation steadily reduces the real purchasing power of a fixed savings balance, so a nest egg that looks sufficient today may buy noticeably less by the time you actually retire decades from now. Use the Retirement Calculator to model savings growth alongside your expected retirement spending needs.
Worked example: $10,000 in 2015 dollars, projected forward to 2025 at an assumed 3% annual inflation rate, comes to 10,000 × 1.0310 ≈ $13,439.16 — cumulative inflation of about 34.39% over that 10-year span.
Want to see how inflation interacts with long-term growth? Try the Retirement Calculator or the Savings Calculator. This is the calculation that dominates retirement planning: a ₹50,000-a-month lifestyle needs ₹6.6 crore if you retire in 25 years, not ₹1.5 crore.