Inflation Calculator

What is Inflation?

Inflation is the rate at which the general level of prices for goods and services rises over time, causing purchasing power to decrease. When inflation rises, every dollar you own buys a smaller percentage of a good or service. Understanding inflation is essential for making informed financial decisions about saving, investing, and planning for the future.

How to Use This Calculator

1. Enter an Amount: Input the dollar amount you want to analyze
2. Select a Start Year: Choose when your money was worth this amount
3. Select an End Year: Choose the year to compare to
4. Use Historical or Custom Rate: Toggle between historical US inflation data or enter a custom rate
5. Review Results: See how much the value has changed over time

Understanding Your Results

Adjusted Value

This shows what your original amount would be worth in the target year, accounting for inflation. For example, $100 in 2000 might equal $175 in 2024 due to cumulative inflation.

Purchasing Power

This indicates how much of the original purchasing power remains. If you had $100 and inflation was 50% cumulative, your $100 now has the purchasing power of only $67 in original terms.

Cumulative Inflation Rate

The total percentage increase in prices over the selected time period, combining all annual inflation rates.

The Formula Behind the Calculation

Adjusted Value Formula:

Adjusted Value = Original Amount × (1 + Cumulative Inflation Rate)

Purchasing Power Formula:

Purchasing Power = Original Amount / (1 + Cumulative Inflation Rate)

Cumulative Inflation:

Cumulative Rate = ((CPI End Year / CPI Start Year) - 1) × 100

Source: Bureau of Labor Statistics (BLS), Consumer Price Index (CPI)

Historical US Inflation Rates

Frequently Asked Questions

What causes inflation?

Inflation is caused by multiple factors: increased money supply, higher demand for goods, rising production costs, supply chain disruptions, and government fiscal policies.

What is a healthy inflation rate?

Most economists consider 2% annual inflation to be healthy. The Federal Reserve targets 2% inflation as a balance between economic growth and price stability.

How does inflation affect my savings?

If your savings earn less interest than the inflation rate, your money loses purchasing power over time. This is called "negative real returns."

What is the difference between inflation and deflation?

Inflation is rising prices (decreasing purchasing power), while deflation is falling prices (increasing purchasing power). Prolonged deflation can be harmful to economies.

How can I protect my money from inflation?

• Invest in assets that historically outpace inflation (stocks, real estate)
• Consider Treasury Inflation-Protected Securities (TIPS)
• Diversify your investment portfolio
• Avoid holding too much cash long-term

Important Limitations

• Historical CPI data may not reflect your personal spending patterns
• Different regions and countries have different inflation rates
• Future inflation rates are unpredictable
• CPI doesn't include all cost increases (like housing in some measures)

Disclaimer: This calculator provides estimates based on historical data and user inputs. Actual inflation effects may vary based on personal spending habits and regional differences. Consult a financial advisor for personalized guidance.