Inflation Calculator

How Inflation Erodes Purchasing Power

Inflation measures how prices increase over time. As prices rise, each dollar buys less. This calculator shows both future value and past purchasing power.

The compounding formula

Future Value = Amount × (1 + rate)ⁿ

Past Value = Amount ÷ (1 + rate)ⁿ

Where rate = annual inflation rate (as a decimal), n = number of years.

Step-by-step

1. Enter the dollar amount.
2. Enter the average annual inflation rate (historically ~3% in the US).
3. Enter the number of years.
4. The calculator shows what that amount will be worth in the future, and what it was worth in the past.

Worked example

0 today at 3% inflation for 20 years: Future value = 0 × (1.03)²⁰ ≈ 0.61. That means what costs 0 today will cost about 1 in 20 years.

The Rule of 72

Divide 72 by the inflation rate to estimate how long it takes for prices to double. At 3%, prices double in about 24 years.