About the inflation calculator
Inflation is the general rise in prices. When prices rise, each dollar buys less, so the same money has less purchasing power in the future.
Future Cost tells you what something that costs a given amount today will cost after some years at an assumed inflation rate. Purchasing Power shows what a sum of money today will be worth in the future, in today’s terms. Inflation Rate works out the average yearly rate from a starting and an ending price.
This calculator uses an inflation rate you enter instead of historical price indexes, which makes it suitable for planning ahead.
Formula
- Future cost = Amount × (1 + rate)^years
- Purchasing power = Amount ÷ (1 + rate)^years
- Rate = (Ending price ÷ Starting price)^(1 ÷ years) − 1
Example
At 3% inflation, something that costs $100 today costs $134.39 in 10 years, and $100 held for 10 years will only buy what $74.41 buys today. A price that rises from $100 to $150 in 10 years means about 4.138% inflation a year.