About the Inflation Calculator
Inflation is the gradual rise in prices that erodes the purchasing power of money over time. This calculator shows what a given amount of money in one year is equivalent to in another year, based on an average annual inflation rate, so you can understand how far a dollar stretches across different periods.
How it’s calculated
Adjusted value = Starting amount × (1 + inflation rate)^years, where years is the difference between the ending and starting year. The change in purchasing power is expressed as a percentage of the original amount.
Example calculation
With an average inflation rate of 3%, $1,000 in the year 2000 has the same buying power as about $1,806 in 2020 — a 80.6% increase over 20 years. Put another way, you'd need $1,806 in 2020 to buy what $1,000 bought in 2000.
Frequently asked questions
Where does the inflation rate come from?
This calculator uses an average annual inflation rate that you enter, which makes it flexible for any scenario or country. The architecture is built so historical, official inflation data can be added later for automatic year-to-year accuracy.
What is a typical inflation rate?
Long-run inflation in many developed economies has averaged around 2–3% per year, though it varies significantly by period and country and can spike much higher during certain years.
How is inflation different from investment growth?
Inflation measures rising costs, which reduce purchasing power. Investment growth measures returns, which increase your money. 'Real' returns are investment growth minus inflation — what actually improves your buying power.
This calculator provides estimates for educational purposes and should not be considered financial, tax, or legal advice. Your actual figures may vary with lender terms, fees, and market conditions.