How this works
Inflation compounds — small annual rates add up to large gaps over decades. This calculator takes a starting amount, a starting year, an ending year, and an assumed annual inflation rate, then computes the equivalent value (what the same purchasing power costs at the later date), the cumulative inflation over the period, and the proportional loss of purchasing power viewed from the start year. Use it to compare historical prices, set retirement targets in real terms, or sanity-check a salary against decade-old benchmarks.
The formula
r = annual inflation rate as a decimal. n = end year − start year. Cumulative inflation grows in step with the equivalent value (50% inflation = prices doubled-by-1.5×). Purchasing power lost is the complementary view: at 50% cumulative inflation, $1 from the start year buys ~67% of what it once did, i.e. a 33% loss. Note: this is a constant-rate model — for actual historical periods inflation varies year-to-year, so use a published CPI series for precise comparisons.
Example calculation
- $1,000 in 2005, ending in 2024 — about 20 years of typical 3% annual inflation.
- Equivalent value: 1,000 × 1.03¹⁹ ≈ $1,754 — what you'd need today to match the 2005 purchasing power.
- Cumulative inflation ≈ 75%. Purchasing power lost ≈ 43% — your 2005 dollar buys about 57¢ worth in 2024.
Frequently asked questions
What inflation rate should I use?
Long-run averages by region: ~2.5–3% for the US, ~1.5–2% for the eurozone (with a 2022–2023 spike to 8–10%), ~0.5–1% for Japan over the last 30 years. For futureplanning, central bank targets are a reasonable anchor: 2% for the US Fed and ECB, ~2% for the BoJ since 2013. For historical comparisons, look up the actual CPI for the country and period you care about — fixed-rate models can drift a lot over long windows.
Why is purchasing power loss less than cumulative inflation?
Different reference points. Cumulative inflation asks 'how much have prices risen?' (50% inflation = prices ×1.5). Purchasing power loss asks 'how much less can my old dollar buy?' Those aren't reciprocal: 50% more in price means the inverse — 1 / 1.5 ≈ 67% as much — i.e. 33% less, not 50% less. Both answers are correct; they're answering different questions.
Should I subtract inflation from my investment returns?
For real-terms planning, yes. A 7% nominal return at 3% inflation is a 4% real return — that's the rate at which your purchasing power actually grows. For long-horizon planning (retirement, big savings goals), real returns matter more than nominal. Rough rule: subtract inflation from your return when comparing investments and from any savings goal when projecting it 20+ years out.
Why does this calculator use a flat rate instead of real CPI data?
Flat rates work without an external data source — the calculator runs entirely in your browser, no API calls. Real CPI data adds another layer (and varies dramatically by country and series — chained vs unchained, headline vs core). For approximate planning, a constant rate based on the central bank target is good enough. We may add a CPI-backed lookup later for the US, eurozone, and UK if there's demand.