Inflation Calculator
Find out what a sum of money is worth after inflation. Enter an amount, a time span and an average annual inflation rate to see the equivalent future value and how much purchasing power is lost.
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Assumes a constant average inflation rate. Actual CPI varies year to year — central banks like the Bank of Canada publish official historical figures.
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Save ⟶How to use the Inflation Calculator
- 1Enter the starting amount of money.
- 2Enter the number of years to project forward (or back).
- 3Set the average annual inflation rate — 2–3% is typical for many economies.
- 4Read the equivalent value and the total loss of purchasing power.
How inflation erodes money
Inflation is the rate at which the general price level rises, which means each unit of currency buys a little less over time. The relationship is exponential: at 3% annual inflation, prices double in about 24 years (rule of 72: 72 ÷ 3). A constant rate r over t years multiplies prices by (1 + r)^t.
This calculator uses a single assumed average rate, which is ideal for planning and 'what if' scenarios. For precise historical comparisons — for example, what a 1990 salary is worth today — official Consumer Price Index (CPI) data from a national statistics agency or central bank is more accurate because real inflation varies every year.
Why inflation matters for savings and investing
Money sitting in cash loses real value every year inflation is positive. A savings account paying 1% while inflation runs at 3% loses 2% of purchasing power annually. This is why long-term savers hold assets — equities, real estate, inflation-linked bonds — that have historically outpaced inflation.
When planning for retirement or any long-term goal, always think in real (inflation-adjusted) terms. A target that looks comfortable in today's money can fall short decades later once inflation is applied.
Frequently Asked Questions
▸What inflation rate should I use?
Many developed economies target around 2%, with long-run averages closer to 3%. Use your country's recent CPI average, or test a range to see best and worst cases.
▸How is cumulative inflation calculated?
Compound the annual rate over the period: (1 + rate)^years − 1. At 3% over 10 years that's about 34% cumulative inflation.
▸Is this the same as official CPI figures?
No — it assumes a single constant rate. Official calculators (such as the Bank of Canada's) use actual year-by-year CPI data, so they're better for exact historical comparisons.