Inflation Calculator

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

Inflation can be caused by demand-pull factors (more money chasing fewer goods), cost-push factors (rising production costs), or built-in inflation (wage-price spirals). Central banks monitor and attempt to control inflation through monetary policy, targeting around 2% annually in the US.

Inflation is typically measured using the Consumer Price Index (CPI), which tracks the average price change over time for a basket of goods and services purchased by urban households. The annual inflation rate is calculated as the percentage change in CPI from one year to the next.

This calculator uses historical average CPI inflation rates to adjust a dollar amount from one year to another. If you provide a custom rate, it uses that rate compounded annually across the number of years between your start and end year. The result shows the equivalent purchasing power in the target year.

To outpace inflation, consider investing in assets that historically grow faster than the inflation rate — such as stocks, real estate, or Treasury Inflation-Protected Securities (TIPS). Keeping large sums in low-yield savings accounts means losing real purchasing power over time.

Purchasing power refers to how much a unit of currency can buy. When inflation rises, purchasing power falls — meaning $100 today buys less than $100 did ten years ago. This calculator quantifies that change for any time period.

The US Federal Reserve targets an average inflation rate of around 2% per year, which is considered healthy for economic growth. Historically, US inflation has averaged roughly 3–4% annually since 1913, though it has spiked much higher during periods like the 1970s and 2021–2023.

Yes. If you enter a value in the 'Custom Annual Inflation Rate' field, the calculator will use that compounded rate instead of estimated historical CPI averages. This is useful for forecasting future purchasing power based on your own inflation assumptions.