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Advanced Inflation Calculator

Calculate the future cost of goods or the erosion of your purchasing power over time. Visualize how inflation eats away at savings.

$

e.g. Monthly Expenses, Salary, or Savings.

%

Historical avg is ~3%. Recent years higher.

Enter data to calculate

The Silent Thief: Understanding How Inflation Eats Wealth

Inflation is the economic force that makes a dollar today worth less than a dollar tomorrow. It is why a movie ticket cost $0.35 in 1940 and costs $15.00 today. While a 3% annual rise might seem small, the effects compound over time, devastating the value of cash savings. Our Advanced Inflation Calculator helps you visualize this impact in two distinct ways: projecting future costs and calculating the erosion of your current purchasing power.

Two Ways to View Inflation

This tool offers two calculation modes depending on your financial question:

  • Future Cost of Living: "I spend $5,000/month today. How much will I need to spend in 20 years to maintain the same lifestyle?" This helps you plan your retirement income target.
  • Value of Savings (Purchasing Power): "If I keep $100,000 in a shoebox for 20 years, what will it actually be able to buy?" This highlights the danger of holding cash that isn't invested.

The Rule of 72 (Inflation Edition)

Just as the Rule of 72 estimates investment growth, it also predicts price doubling. Divide 72 by the inflation rate to see how fast prices double.

  • At 3% Inflation: Prices double every 24 years.
  • At 6% Inflation: Prices double every 12 years.
  • At 9% Inflation: Prices double every 8 years.

Real vs. Nominal Returns

This calculator is essential for investors. If your savings account pays 4% interest (Nominal Return), but inflation is 3%, your Real Return is only 1%. You are barely moving forward. If inflation spikes to 5%, your Real Return becomes negative (-1%), meaning you are actively losing wealth even though your account balance is growing.

Frequently Asked Questions

What is the average inflation rate?

Historically, the US Federal Reserve aims for a target rate of 2%. However, the long-term historical average is closer to 3.2%. Periods of economic turmoil can see spikes (like the 9% rates seen in 2022).

What is CPI?

The Consumer Price Index (CPI) is the standard measure used by governments to track inflation. It measures the average change in prices paid by urban consumers for a "basket" of goods like food, energy, and housing.

How can I protect against inflation?

The standard advice is to invest in assets that tend to rise with prices. This typically includes Equities (Stocks), Real Estate, and inflation-protected bonds (like TIPS). Holding large amounts of cash is generally the worst strategy during high inflation.