What inflation means for your money
Inflation is the rise in prices over time. When prices go up, each unit of money buys a little less. That's why a sum that feels large today will buy noticeably less in 10 or 20 years, and why money kept in cash slowly loses value.
This calculator answers two sides of the same question:
- Future cost: what you'll need in the future to buy what costs this amount today.
- Buying power: what today's amount, kept as cash, will be worth in today's prices in the future.
The inflation formulas
Prices compound, just like interest: each year's rise is applied to the already higher price.
future cost = amount × (1 + rate ÷ 100)years
buying power = amount ÷ (1 + rate ÷ 100)years
Worked example
A basket of shopping costs 100 today, and inflation runs at 3% a year for 10 years.
1.0310 = 1.3439. So the same basket will cost 134.39, a rise of 34.4%.
And 100 kept under the mattress will only buy what 74.41 buys today.
How fast prices add up
What 100 today costs in the future:
| Inflation | After 10 years | After 20 years | After 30 years |
|---|---|---|---|
| 2% | 121.90 | 148.59 | 181.14 |
| 3% | 134.39 | 180.61 | 242.73 |
| 5% | 162.89 | 265.33 | 432.19 |
| 7% | 196.72 | 386.97 | 761.23 |
The rule of 72: divide 72 by the inflation rate to estimate how many years it takes for prices to double. At 3%, that's about 24 years. At 6%, about 12.
What inflation rate should I use?
Many central banks, including the US Federal Reserve, the Bank of England and the European Central Bank, aim for about 2% a year over the long run. Actual inflation is often higher or lower than that, and in some countries it's much higher. For planning, people often use 2–3%, or the recent average in their country, which you can find from the national statistics office.
Good to know: the calculator assumes the same rate every year. Real inflation varies from year to year, and the prices of different things (rent, food, education, electronics) rise at different speeds. Use the result as a planning estimate.
Frequently asked questions
How do I protect my savings from inflation?
Money only keeps its buying power if it earns at least the inflation rate after tax. Savings accounts, government inflation-linked bonds and long-term investments can help. Compare a savings rate with inflation using the compound interest calculator.
Can I enter a negative rate?
Yes. Falling prices are called deflation. Enter a negative rate, like −1, to see prices drop and buying power rise.
Why does the price rise grow faster each year?
Because inflation compounds. 3% of a higher price is a bigger amount, so the yearly increase grows even though the rate stays the same.
Last reviewed November 2026.