Inflation Calculator
Inflation Impact
1,000.00
Today's Value
1,343.92
Future Cost
25.6%
Purchasing Power Lost
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 fall. If inflation is 3% per year, an item costing 1,000 today will cost approximately 1,344 in 10 years.
Understanding inflation is crucial for long-term financial planning, retirement savings, and investment decisions. Money sitting idle loses real value every year.
How to Use This Calculator
- Initial Amount: Enter today's value of the money or price.
- Inflation Rate: Enter the expected annual inflation rate (global average is ~3%).
- Years: Enter the number of years into the future.
- The calculator shows what that amount will be worth in future terms.
Frequently Asked Questions
What is a good inflation rate?
Most central banks target around 2% annual inflation as healthy for an economy. Rates between 2–4% are considered moderate. Rates above 5–6% can significantly erode purchasing power.
How does inflation affect savings?
If your savings earn less interest than the inflation rate, the real value of your money declines over time. For example, money in a savings account earning 1% while inflation is 3% loses 2% of real purchasing power each year.
What causes inflation?
Inflation can be caused by demand-pull factors (too much money chasing too few goods), cost-push factors (rising production costs), or monetary factors (excessive money supply growth). Supply chain disruptions and energy prices are also common drivers.
How can I protect against inflation?
Investing in assets that historically outpace inflation — such as equities, real estate, inflation-linked bonds (TIPS), and commodities — can help preserve purchasing power. Leaving large sums in cash savings carries significant inflation risk over long periods.