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Inflation Calculator

See what money is really worth over time - how much you would need in future to buy what a sum buys today, and how fast purchasing power erodes.

Inflation Calculator

Central banks target around 2%. The long-run average has been nearer 3%.

What you would need in 2046

$1,806.11

to buy what $1,000 buys today, at 3% a year

Total inflation

80.6%

Over 20 years

Purchasing power

55.4%

Of what it is today

Value lost

$446

In today's money

Halves in

23 yrs

Rule of 70

Cash left under a mattress at 3% inflation loses 44.6% of its buying power over 20 years. The $1,000 still says the same number; it just buys 55% of what it does now. This is why a savings account paying less than inflation is a loss in real terms, even though the balance goes up.

Year by year

What $1,000 of today’s money costs in each future year.

YearEquivalentBuying power
2026$1,000100%
2027$1,03097%
2028$1,06194%
2029$1,09392%
2030$1,12689%
2031$1,15986%
2032$1,19484%
2033$1,23081%
2034$1,26779%
2035$1,30577%
2036$1,34474%
2037$1,38472%
2038$1,42670%
2039$1,46968%
2040$1,51366%
2041$1,55864%
2042$1,60562%
2043$1,65361%
2044$1,70259%
2045$1,75457%
2046$1,80655%

The arithmetic

  • Amount in 2026$1,000
  • Annual rate3%
  • Years20
  • Compound factor× 1.806
  • Equivalent in 2046$1,806

Inflation compounds like interest, which is why the damage is worse than it looks. At 3%, purchasing power halves in about 24 years — not the 33 a linear reading would suggest.

The link carries the values you entered, so whoever opens it sees the same result. Nothing is stored on our side — the numbers travel in the link itself.

How the inflation calculation works

Inflation is the rate at which money loses purchasing power. The arithmetic is identical to compound interest, running in the opposite direction — and the fact that it compounds is what makes it far more damaging than the headline rate suggests.

The calculation

future amount = today's amount × (1 + rate)^years

At 3% a year, £1,000 today needs to be £1,344 in ten years to buy the same goods, and £1,806 in twenty. The reciprocal is the purchasing power of the original sum: after twenty years your £1,000 still says £1,000 and buys what £554 buys now.

The rule of 70

Divide 70 by the inflation rate for the years it takes purchasing power to halve:

Rate Halves in
2% 35 years
3% 24 years
5% 14 years
7% 10 years
10% 7 years

At the 2% most central banks target, money entering a 40-year career loses more than half its value before retirement. That is the successful case.

Why this matters for savings

A savings account paying 2% during 3% inflation is a real loss of about 1% a year, even though the balance rises. The number in the account goes up; what it buys goes down. This is the single most common misreading of a savings statement, and it is why "safe" cash holdings are not risk-free over long periods — they simply carry a different risk.

Real return = nominal return − inflation. Only the real figure tells you whether you gained anything.

Where the official rate comes from, and why it may not be yours

Published inflation is measured by tracking a basket of goods — CPI in the US and UK, HICP across the EU. Two limitations matter:

  • The basket is an average. Your personal rate depends on what you actually buy. Between 2000 and 2020, US medical costs and college tuition rose far faster than the headline CPI while consumer electronics fell outright.
  • The basket changes. Substitution adjustments assume you switch to cheaper alternatives when prices rise, which some economists argue understates the lived experience of inflation.

This calculator uses a fixed rate you choose, not historical CPI data. That is deliberate: for planning, what matters is the rate you expect going forward, and a single assumption you can vary is more honest than a precise-looking historical series that may not repeat.

Using it for retirement planning

This is where inflation does the most damage, because the horizon is longest. An income of £30,000 a year needs to be £54,000 in twenty years at 3% to maintain the same standard of living. Any retirement projection quoted in today's money without an inflation adjustment is substantially overstating what it will actually buy.

Disclaimer: This calculator provides estimates for informational purposes only and is not financial advice. Your actual rate, taxes, fees, and payment will vary - confirm figures with a licensed lender or financial professional.

Frequently asked questions

What is a normal rate of inflation?

Most developed-economy central banks target around 2% a year, which they consider low enough to be ignorable and high enough to avoid deflation. The long-run historical average in the US and UK has been nearer 3%. Periods well outside that range happen - the 1970s saw double digits, and the 2010s ran below target for years - so planning with a single assumed rate should be treated as a scenario, not a forecast.

How long does it take for money to lose half its value?

Divide 70 by the inflation rate. At 2% it takes about 35 years, at 3% about 24, at 5% about 14, and at 7% roughly a decade. The rule of 70 is an approximation of the logarithm involved but it is accurate enough for any planning purpose, and it makes the compounding intuitive in a way the raw percentage does not.

Is my savings account keeping up with inflation?

Subtract the inflation rate from your account rate. If the result is negative you are losing purchasing power despite the balance rising - an account paying 2% during 3% inflation loses about 1% a year in real terms. This is why holding large cash balances for long periods is not the risk-free choice it appears to be; it simply substitutes a slow certain loss for an uncertain one.

Why does official inflation not match what I see in the shops?

Because the published figure tracks an average basket across the whole economy, and your basket is not the average one. If you spend heavily on categories rising faster than the mean - housing, healthcare, education - your personal rate is higher than the headline. The index also applies substitution adjustments, assuming people switch to cheaper alternatives when prices rise, which not everyone can do.

How should I account for inflation in retirement planning?

Inflate the income you want, not just the pot. An income of £30,000 in today’s money needs to be about £54,000 in twenty years at 3% to buy the same things. Then check whether your projected income actually rises: a defined-benefit pension with an inflation link behaves very differently from a fixed annuity, which loses purchasing power every year of a retirement that may last thirty.

What is deflation, and is it better?

Deflation is negative inflation - the same money buys more later. It sounds benign and generally is not. When prices are expected to fall, people delay purchases, which reduces demand and deepens the downturn that caused it. Debt also becomes harder to repay in real terms. Japan spent decades dealing with the consequences, which is why central banks target a small positive rate rather than zero.

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