How Inflation Changes What Money Is Worth
Inflation quietly changes prices year after year. Compounding explains why even a small annual rate adds up over a decade.
What is the Inflation Calculator?
The future cost grows by compounding: the amount multiplied by one plus the inflation rate, raised to the power of the number of years. Today's purchasing power does the reverse, dividing the amount by that same growth factor. Both views use the same annual rate applied every year.
How to use it
- Enter the amount in today's money.
- Enter the expected annual inflation rate as a percentage.
- Enter the number of years, then read the future cost and today's purchasing power.
Worked example
Amount 100, inflation 3%, 10 years: future cost 134.39, today's purchasing power 74.41.
What will 100 cost in 10 years at 3% annual inflation?
It will cost about 134.39. Multiply 100 by 1.03 raised to the power of 10, which is about 1.3439. Conversely, 100 in 10 years time would have a purchasing power of about 74.41 in today's money.
Frequently asked questions
Why do the two results differ?
Future cost shows what the same basket costs later, while purchasing power shows what a fixed sum can buy later. One grows with inflation and the other shrinks.
Is the inflation rate assumed constant?
Yes, this tool applies the same annual rate every year, so treat the result as an estimate, not a prediction.