Inflation Calculator
Calculate the impact of inflation on purchasing power over time. Find the equivalent value of money in any year and see how much prices have risen.
How It Works
Choose a starting amount, a start and end year, and an annual inflation rate. In 'Future Value' mode, see what a past amount is equivalent to today. In 'Past Equivalent' mode, see how much purchasing power an amount from the future would have needed today.
Formula
FV = PV × (1 + i)^n
Where: FV = future (inflation-adjusted) value | PV = present value (starting amount) | i = annual inflation rate (decimal) | n = number of years between the start and end year. The 'Past Equivalent' mode simply divides instead of multiplies.
Worked Example
What $1,000 from 2000 is worth today
- Starting amount: $1,000 in year 2000
- Annual inflation rate: 3.0%
- Years elapsed: 26 years (2000 to 2026)
- Factor = (1.03)^26 ≈ 2.16
- Equivalent value in 2026 ≈ $2,157
- Cumulative inflation over the period: ≈115.7%
Common Mistakes
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Assuming inflation is the same every year
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Real inflation fluctuates significantly year to year (near 0% in some years, above 8% in 2022). A constant-rate model is a useful approximation, not an exact historical figure.
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Confusing 'price increase' with 'purchasing power loss'
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If prices rise 20%, purchasing power doesn't fall by exactly 20% — it falls by 20/(100+20) ≈ 16.7%, since the base for the percentage calculation changes.
