Inflation Calculator

Calculate how inflation affects purchasing power over time. See what your money is really worth.

💵 Dollar Amount ($)

🔍 Calculation Type

📅 Number of Years

📈 Annual Inflation Rate (%)

Inflation Impact

Original Amount

Adjusted Value

Purchasing Power Lost

Breakdown

Time Period 0 years

Average Annual Inflation 0%

Cumulative Inflation 0%

Purchasing Power Retained 100%

Purchasing Power Over Time

Year-by-Year Breakdown

Year	Inflation Rate	Value (Nominal)	Value (Real)	Power Lost

Understanding Inflation and Purchasing Power

What Is Inflation?

Inflation is the rate at which the general level of prices for goods and services rises over time. As inflation increases, each dollar buys fewer goods and services, reducing your purchasing power.

For example, if a basket of goods costs $100 today and inflation is 3% annually, that same basket will cost $103 next year.

Why Does Inflation Matter?

Inflation directly affects your savings, investments, and retirement planning. Money sitting in a low-interest savings account loses value over time if the interest rate doesn't keep pace with inflation.

Understanding inflation helps you make smarter financial decisions about where to keep your money and how much you need to save for future goals.

Historical US Inflation Rates

US inflation has varied significantly throughout history:

1913-2024 average: 3.3% per year
1970s: High inflation, averaging 7.1%
2010s: Low inflation, averaging 1.8%
2020-2023: Elevated inflation, averaging 4.7%

Protecting Against Inflation

To preserve purchasing power, consider investments that historically outpace inflation:

Stocks: Long-term average return ~10% annually
Real Estate: Property values tend to rise with inflation
TIPS: Treasury Inflation-Protected Securities adjust with CPI
I Bonds: Savings bonds with inflation protection

Frequently Asked Questions

How does inflation affect purchasing power?

Inflation reduces purchasing power by increasing the cost of goods and services over time. A dollar today will buy less in the future if inflation continues. For example, at 3% annual inflation, $100 today will only have the purchasing power of about $74 in 10 years.

What is a good inflation rate?

The Federal Reserve targets a 2% annual inflation rate as optimal for a healthy economy. This rate encourages spending and investment while maintaining price stability. Rates significantly above or below 2% can indicate economic problems.

How do I protect my money from inflation?

To protect against inflation, invest in assets that historically outpace inflation such as stocks, real estate, and Treasury Inflation-Protected Securities (TIPS). Keeping too much cash loses value over time due to inflation eroding purchasing power.

What was the average inflation rate in the US?

The average US inflation rate has been approximately 3.3% since 1913. However, it varies significantly by decade - the 1970s saw high inflation averaging 7.1%, while the 2010s averaged only 1.8%.