📊 Inflation Calculator
Discover how inflation erodes purchasing power over time. Enter an amount, years, and inflation rate to see equivalent values — or find out what past prices mean in today's money.
What Inflation Actually Measures
Inflation is the rate at which the general price level of goods and services rises over time, eroding the purchasing power of money. It is most commonly measured by the Consumer Price Index (CPI), which tracks a representative "basket" of goods and services — food, housing, transportation, medical care, and more — that a typical urban household purchases. The Federal Reserve targets a 2% annual inflation rate as the level associated with healthy economic growth and price stability.
How Inflation Erodes Purchasing Power
At 3% annual inflation, $100 today buys what $74 will buy in 10 years — a 26% loss of purchasing power. At the elevated 7–8% inflation seen in 2022, money lost roughly half its value in just 9–10 years. This is why holding large amounts of cash long-term is a financial risk, not just a missed opportunity. Investments that historically outpace inflation — broad stock market index funds, real estate, Treasury Inflation-Protected Securities (TIPS) — serve as a hedge against this gradual erosion.
Historical vs. Custom Inflation Rates
The US long-run average inflation rate since 1913 has been approximately 3.2% per year. However, inflation varies significantly by category: medical costs have historically risen faster than general CPI, while technology products tend to fall in price over time. When planning for future expenses, using a category-specific inflation rate (e.g., 5–6% for healthcare, 2% for electronics) gives a more realistic projection than applying a single average rate to all spending.