Inflation Calculator 2026
See exactly how inflation erodes the buying power of money over time. Calculate future costs and the real value of todays dollars at any inflation rate.
Last updated April 2026 · Sources: BLS Consumer Price Index 1913-2026, Federal Reserve inflation reports, BEA Personal Consumption Expenditures price index
Your numbers
Inflation impact
Inflation impact at common rates
How much purchasing power you lose over time at various inflation rates. Even modest inflation compounds significantly over decades.
| Years | 2% inflation | 3% inflation | 4% inflation | 6% inflation |
|---|---|---|---|---|
| 5 years | $906 | $863 | $822 | $747 |
| 10 years | $820 | $744 | $676 | $558 |
| 15 years | $743 | $642 | $555 | $417 |
| 20 years | $673 | $554 | $456 | $312 |
| 30 years | $552 | $412 | $308 | $174 |
| 40 years | $453 | $307 | $208 | $97 |
Each cell shows the buying power of $1,000 today after the given number of years at the given inflation rate. At average 3% inflation over a 30-year retirement, $1,000 today buys what $412 buys today.
Frequently Asked Questions
What is inflation and how is it measured?
Inflation is the general increase in prices over time, which means each dollar buys less than it did before. The most common measure in the US is the Consumer Price Index (CPI) calculated by the Bureau of Labor Statistics, which tracks the price of a basket of goods and services that typical consumers buy. The CPI is reported monthly and the year-over-year change is what most people refer to as "the inflation rate."
What is the average inflation rate in the US?
The long-term average from 1913 (when CPI tracking began) to 2025 is about 3.2% per year. The Federal Reserve targets 2% as its preferred long-run rate. Recent decades have seen lower inflation: 2010-2019 averaged 1.8%, while 2020-2024 saw the post-pandemic spike with 2022 hitting 8.0% — the highest in 40 years. As of early 2026, inflation has settled back to roughly 2.5-3.0%, close to the long-term average.
How does inflation affect my savings?
Inflation reduces the purchasing power of money sitting in low-interest accounts. If your savings earn 1% but inflation is 3%, you are effectively losing 2% per year in real value. Over 20 years, that compounds to about a 33% loss in buying power. This is why financial advisors recommend keeping only emergency funds in cash and investing the rest in assets that historically outpace inflation: stocks, real estate, and Treasury Inflation-Protected Securities (TIPS).
What is the formula for calculating inflation impact?
Future cost: Amount × (1 + inflation rate)^years. To find what $1,000 today will cost in 10 years at 3% inflation: $1,000 × (1.03)^10 = $1,343.92. Buying power (the reverse): Amount / (1 + inflation rate)^years. To find what $1,000 will be worth in 10 years in todays dollars: $1,000 / (1.03)^10 = $744.09. Both formulas use compound math, not simple addition.
What is the difference between nominal and real returns?
Nominal return is the raw percentage increase before adjusting for inflation. Real return is what you actually earned in purchasing power after subtracting inflation. If your investments grew 10% in a year when inflation was 3%, your nominal return was 10% but your real return was about 7%. Real returns are what actually matter for long-term wealth building because inflation steadily erodes nominal gains.
How does the Federal Reserve control inflation?
Primarily through interest rates. When inflation rises above the 2% target, the Fed raises the federal funds rate, which makes borrowing more expensive, slows spending and investment, and cools price pressures. When inflation falls below target or unemployment rises, the Fed cuts rates to stimulate spending. The Fed also uses open market operations and reserve requirements as additional tools, but interest rate changes get the most attention.
What causes inflation?
Three main types: demand-pull (too much money chasing too few goods, common during economic booms), cost-push (rising production costs like energy or raw materials passed through to consumers), and built-in (wage-price spirals where workers demand higher wages to offset rising prices, which pushes prices higher still). The post-pandemic 2021-2023 inflation wave combined supply chain disruptions (cost-push) with stimulus-driven demand (demand-pull), creating the worst inflation in decades.
How does inflation affect retirees?
Significantly. Retirees on fixed incomes (pensions, annuities, fixed-income investments) lose buying power steadily. Social Security payments are adjusted annually based on the CPI, but the calculation uses CPI-W which historically underestimates senior spending patterns. A retiree planning to live 30 years in retirement should assume their cost of living roughly doubles over that time at average 2.5% inflation. This is why "inflation-adjusted" retirement projections are essential.
What is hyperinflation?
Inflation rates of 50% or more per month, often caused by extreme government debt, war, or economic collapse. Famous examples include Weimar Germany in 1923 (peaked at 29,500% per month), Zimbabwe in 2008, and Venezuela in 2018-2019. Hyperinflation destroys savings almost completely and typically triggers a return to barter or foreign currencies. Modern central banks consider hyperinflation prevention to be one of their core missions, but it remains a real risk in some emerging markets.
Are some items affected by inflation more than others?
Yes. Healthcare and education have inflated faster than overall CPI for decades — typically 4-5% per year compared to 2-3% overall. Housing and rent have also outpaced overall inflation since 2010. Technology, by contrast, deflates: televisions, computers, and software have gotten cheaper while becoming more capable. Food and energy are highly volatile but average around overall inflation over long periods. Plan retirement expenses with category-specific inflation rates when possible.
How do I protect against inflation?
Diversify into inflation-resistant assets. Stocks have historically beaten inflation by about 6-7% per year on average. Real estate (especially with fixed-rate mortgages) benefits from inflation because nominal property values rise while debt obligations stay flat. Treasury Inflation-Protected Securities (TIPS) are explicitly indexed to CPI. Commodities like gold and oil sometimes hedge inflation but are volatile. The worst inflation hedge is cash earning sub-inflation interest.
Why does the government want any inflation at all?
A small amount of inflation (around 2%) is considered healthy because it gives the central bank room to cut rates during recessions, encourages spending and investment rather than hoarding cash, makes wage adjustments easier (employers can give zero raises in real terms during downturns without explicit pay cuts), and reduces the real burden of existing debt. Deflation — falling prices — is generally considered worse because it can spiral and trigger recessions as consumers delay spending in expectation of lower future prices.
Sources: BLS Consumer Price Index 1913-2026, Federal Reserve inflation expectations and policy reports, BEA Personal Consumption Expenditures (PCE) price index, Federal Reserve Bank of St. Louis FRED database.
Disclaimer: Calculations assume constant inflation rate. Actual inflation varies year to year and by spending category. Use historical averages cautiously when projecting decades into the future.