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Inflation Calculator - Purchasing Power Calculator

Free inflation calculator to calculate the real value of money, purchasing power changes, and inflation-adjusted returns over time.

Inflation Calculator

See the real value of your money and inflation's impact

Inflation Impact

Enter your values to see results

and click the "Calculate" button

What is Inflation?

Inflation is the rate at which the general level of prices rises over time, reducing the purchasing power of money. It's measured by the Consumer Price Index (CPI). In a high-inflation environment, keeping money in cash means losing value - because the same amount buys less over time. This calculator shows how inflation affects your money.

How to Use This Calculator

Select the type of calculation you need
Enter the amount of money
Specify the inflation rate or use the default
Enter the time period in years
Click Calculate to see the results

Inflation Calculation Formula

Future Value = Present Value × (1 + Inflation Rate)^Years

For purchasing power: Real Value = Nominal Value / (1 + Inflation Rate)^Years. For real return: Real Return = (1 + Nominal Return) / (1 + Inflation) - 1

Frequently Asked Questions

How does inflation reduce money's value?

Inflation increases prices, so the same amount of money buys fewer goods. At 3% inflation, a $100 item costs $103 next year, but your $100 stays $100 - reducing your purchasing power by about 3%.

What is CPI (Consumer Price Index)?

CPI measures the average price change of a basket of consumer goods and services. It's the most common inflation measure, published monthly by government statistical agencies.

How is real return calculated?

Real Return = (1 + Nominal Return) / (1 + Inflation) - 1. For example, with 7% return and 3% inflation: (1.07/1.03) - 1 = 3.88% real return.

What happens if my savings rate is below inflation?

You experience a real loss. Your account balance grows nominally, but purchasing power decreases. With 2% savings rate and 3% inflation, you're effectively losing about 1% per year in real terms.

How can I protect against inflation?

Common inflation hedges include: TIPS (Treasury Inflation-Protected Securities), stocks (companies can raise prices), real estate, commodities like gold, and I-Bonds. Diversification across asset classes is key.

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