Finance
Inflation Calculator
Calculate how inflation affects the purchasing power of money over any time period. Find out what past dollars are worth today, or how much today's money will be worth in the future. Uses a customizable annual inflation rate.
Quick examples
US Average Inflation Rate by Decade
| Period | Avg Annual Rate | Context |
|---|---|---|
| 1960s | 2.8% | Post-war prosperity, stable prices |
| 1970s | 7.1% | Oil shocks, stagflation era |
| 1980s | 5.6% | Fed tightening, declining from peak |
| 1990s | 3.0% | Stable growth, tech boom |
| 2000s | 2.6% | Moderate inflation, 2008 crisis |
| 2010s | 1.8% | Post-crisis low inflation |
| 2020s | 4.5% | COVID stimulus, supply chain disruptions |
| Long-run avg | 3.1% | Historical US average since 1913 |
Source: US Bureau of Labor Statistics CPI data. The Federal Reserve targets 2% annual inflation.
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Frequently Asked Questions
What is inflation and how does it affect my money?
Inflation is the rate at which the general price level of goods and services rises over time, reducing purchasing power. If inflation is 3% per year, something that cost $100 today will cost $103 next year. Over 20 years at 3% inflation, that same item costs $180. This means $100 in 2005 has the purchasing power of only about $55 today — your money buys less over time.
What is the average US inflation rate?
The long-run average US inflation rate since 1913 is approximately 3.1% per year. By decade: the 1970s averaged 7.1% (oil shocks), the 2010s averaged just 1.8% (post-crisis low inflation), and the early 2020s averaged around 4.5% due to COVID-related supply chain disruptions and stimulus spending. The Federal Reserve targets 2% annual inflation as its benchmark.
How do I calculate inflation-adjusted value?
Formula: Adjusted Value = Original Amount × (1 + Inflation Rate)^Years. Example: $1,000 in 2000 at 3.1% average inflation for 25 years: $1,000 × (1.031)^25 = $1,000 × 2.138 = $2,138. This means what cost $1,000 in 2000 costs approximately $2,138 today — or equivalently, $1,000 in 2000 had the same purchasing power as $2,138 in 2025.
What is purchasing power and why does it matter?
Purchasing power is the real value of money — what it can actually buy. When inflation rises, each dollar buys fewer goods and services. This is why a salary that doesn't keep pace with inflation effectively means a pay cut in real terms. If you earn $50,000 in 2020 and your salary stays flat while inflation runs at 4% annually, by 2025 your real purchasing power has fallen by about 18% — equivalent to a salary cut to about $41,000.
How does inflation affect savings and investments?
If your savings account earns 1% interest while inflation runs at 3%, your money is effectively losing 2% in purchasing power per year. This 'real return' = nominal return − inflation rate. This is why keeping large amounts in low-interest accounts is considered a wealth risk. Investments that historically beat inflation include stocks (S&P 500 ~7% real return after inflation), real estate, and inflation-protected bonds (TIPS).
What causes high inflation?
Key drivers of inflation include: demand-pull inflation (too much money chasing too few goods, often from government stimulus or easy monetary policy), cost-push inflation (rising production costs — oil prices, wages — passed to consumers), supply chain disruptions (COVID-19 is a prime example), and monetary expansion (excessive money printing devalues currency). Central banks combat inflation by raising interest rates, which increases borrowing costs and slows spending.
What is the Rule of 70 for inflation?
The Rule of 70 estimates how long it takes for prices to double at a given inflation rate: Years to Double = 70 ÷ Inflation Rate. At 2% inflation: 70 ÷ 2 = 35 years to double prices. At 3.5% inflation: 70 ÷ 3.5 = 20 years. At 7% inflation (1970s level): 70 ÷ 7 = just 10 years. This shows why even moderate inflation significantly erodes purchasing power over decades.