Inflation Calculator
See how inflation erodes purchasing power and what your money is really worth over time
// Purchasing Power Remaining
// Impact at Different Inflation Rates
// Purchasing Power Over Time
Year-by-Year Breakdown
| Year | Inflation | Equivalent Value | Purchasing Power | Cumulative |
|---|---|---|---|---|
| 📊 Calculate above to see yearly breakdown | ||||
Understanding Inflation and Purchasing Power
Inflation is the rate at which the general price level of goods and services rises over time. As prices rise, each unit of currency buys fewer goods — this is known as a loss of purchasing power. A loaf of bread that cost £1 in 2000 might cost £1.80 today due to inflation.
Three Ways to Use This Calculator
Future Value — Enter an amount today and see what it would cost in the future at a given inflation rate. Useful for planning future expenses like education or retirement spending.
Past Value — Enter an amount today and see what it was equivalent to in the past. Useful for comparing prices across time periods.
Find Rate — Enter two amounts and a time period to calculate the implied annual inflation rate between them.
Inflation Formulas
What Is a Normal Inflation Rate?
Most central banks — including the Federal Reserve, European Central Bank, and Bank of England — target an annual inflation rate of around 2%. Rates between 1–3% are generally considered healthy. Above 5% is considered high, and above 10% is severe. Deflation (negative inflation) can also be harmful to an economy.
How to Beat Inflation
Keeping money in cash means it loses value over time. To maintain or grow purchasing power, your savings and investments need to generate a return that exceeds the inflation rate. This is why the "real return" on investments — the return minus inflation — is the figure that truly matters for long-term wealth building.
From the Blog
// Rule of 70
Divide 70 by the inflation rate to estimate how many years it takes for prices to double. At 3%, prices double every ~23 years.
// Real Returns
Subtract inflation from your investment return to get the real return. 6% investment − 3% inflation = 3% real growth.
// Cash Loses
Money kept in a low-interest account loses real value every year. Even 1% inflation halves purchasing power in 70 years.
// Salary Check
If your pay rise is less than inflation, you've had a real-terms pay cut. Use this calculator to check your real wage growth.