Inflation Calculator
This means you will need $0.00 in 0 years to buy what $0.00 buys today.
What is Inflation?
Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.
How to Calculate Future Value with Inflation?
If you are wondering how to calculate inflation rate impact on your savings, the formula to calculate the future value of money based on inflation is:
FV = PV * (1 + r/100)^n
- FV = Future Value (What you will need in the future)
- PV = Present Value (Current Amount)
- r = Expected Annual Inflation Rate (%)
- n = Number of Years
Frequently Asked Questions
Money loses value over time due to inflation. As the prices of goods and services increase across the economy, a single unit of currency buys fewer goods and services than it did previously. This is why a purchasing power calculator is essential for long-term retirement planning.
Most central banks, like the Federal Reserve in the US, target an annual inflation rate of around 2% to 3% to maintain a healthy, growing economy without causing prices to spiral out of control.
While this tool is primarily designed to forecast future value based on an expected average rate, you can use it as a basic inflation calculator historical tool by entering a past amount, the average historical inflation rate for that period, and the number of years that have passed to see what that money would be worth today.
If the interest rate you earn on your savings account is lower than the inflation rate, your money is effectively losing purchasing power over time. To combat this, investors often look to assets like stocks, real estate, or Treasury Inflation-Protected Securities (TIPS) that have historically outpaced inflation.