Inflation Calculator — Future Cost and Purchasing Power of Money

How to use the inflation calculator

1. Choose what to Calculate: Future cost (what today’s price becomes) or Future purchasing power (what a future sum is worth in today’s money).
2. Enter the Amount today.
3. Enter the Inflation rate (per year) and the number of Years.
4. Optionally, enter an Investment return to compare to see its real return after inflation.
5. Pick your currency and read the result. The table shows the cost or purchasing power for each year.

What it does and when to use it

Inflation quietly changes the meaning of every long-term number. A savings goal, a pension or a salary that sounds large today will buy less in 20 years. This calculator puts a figure on that, which helps you:

• Set a realistic target for a goal years away, such as education or retirement.
• Turn the result of another calculator into today’s money. For example, run a SIP Calculator result through the purchasing power mode.
• Check whether a savings account or deposit is beating inflation, using the real return.
• Understand how fast prices double at a given rate.

The US Bureau of Labor Statistics describes the CPI as a measure of the average change over time in the prices urban consumers pay for a basket of goods and services. Your own inflation rate depends on what you buy, so the rate you enter is an assumption, not a fact about the future.

How it works

With amount A, inflation rate i (as a decimal) and years n:

• Future cost = A × (1 + i)^n
• Purchasing power = A ÷ (1 + i)^n
• Years for prices to double = ln 2 ÷ ln(1 + i)
• Real return = (1 + nominal) ÷ (1 + i) − 1

Inflation compounds just like interest, but works against you. The calculation runs in your browser.

Worked examples

Future cost. ₹1,000 today at 6% inflation for 10 years becomes Cost in 10 years: ₹1,790.85. Prices double in 11.9 years at this rate.

Purchasing power. ₹1,00,000 received in 10 years, at 6% inflation, is worth ₹55,839.48 in today’s money.

Real return. With 6% inflation, a 7% investment has a real return of 0.94% a year.

A longer horizon in dollars. $50,000 of yearly costs today, at 3% inflation for 20 years, becomes Cost in 20 years: $90,305.56. At that rate prices double in 23.4 years, and a 5% return is a real return of 1.94%.

Limits and tips

• The rate is fixed for every year. Real inflation moves around, so try a range of rates.
• The tool looks forward from today. It does not use historical index data to convert past prices.
• Tax is not included in the real return.
• To compare interest growth with inflation, see Simple vs Compound Interest or the Compound Interest Calculator.