Inflation Calculator
Translate dollars across time.
Why inflation matters more than you think
Inflation quietly steals buying power from every dollar you hold. 2.5% annual inflation — the historical US average — means $100 today buys about $78 of goods in 10 years, $61 in 20 years. If your savings earn 2% in a bank account during 3% inflation, you're losing 1% of real wealth per year even though the number goes up.
The reverse is also true: inflation helps fixed-rate borrowers. A 5% mortgage during 3% inflation has a real cost of only 2%. This is why people with pre-2022 low-rate mortgages are reluctant to move — the inflation since has turned those loans into phenomenal deals.
Frequently asked questions
What is inflation, in one sentence?
Inflation is the rate at which the same dollar buys less over time. $100 of goods in 2000 cost about $184 in 2024 — that's roughly 2.5% average annual inflation. Your salary, savings, and investments all need to grow at least this fast just to stand still.
What's the difference between CPI and 'real' inflation?
CPI (Consumer Price Index) is the government's basket-of-goods measure and runs around 2–3%/yr on average. 'Real' inflation felt by you depends on what you buy — housing and healthcare have inflated 4–5%/yr, electronics have deflated. CPI is the standard used in most calculations but may understate or overstate YOUR personal inflation.
What's the difference between nominal and real returns?
Nominal is what the account statement shows. Real is nominal minus inflation — the actual increase in buying power. A 7% nominal return during 3% inflation is only 4% real. For long-term planning, real returns are what matter; don't get fooled by high-inflation-era nominal returns.
How does inflation affect fixed-rate debt?
Inflation is secretly great for fixed-rate borrowers. A 30-year mortgage at 6% during 3% inflation has a real rate of only 3%. If inflation spikes to 5%, your real rate drops to 1%. That's why people with cheap pre-2022 mortgages are so reluctant to refinance or sell.
Advertisement
728 × 90