US Inflation calculator

How inflation affects money over time

Inflation is the rate at which the general price level increases — equivalently, the rate at which a unit of currency loses purchasing power.

Future cost = today's cost × (1 + inflation rate)years
Real value = nominal value / (1 + inflation rate)years

Worked example

$100 today at 3% inflation:

• 5 years: needs $115.93 to match
• 10 years: $134.39
• 20 years: $180.61
• 30 years: $242.73

Conversely, $100 in 10 years has the purchasing power of $74.41 today at 3% inflation. Over a 30-year career or retirement, inflation erodes about 60% of nominal-dollar purchasing power.

Real vs nominal return

Nominal return is the headline rate — "my investment grew 8% this year."
Real return is nominal minus inflation — "after inflation, I really grew 5%."

If a savings account pays 4% but inflation runs 5%, your real return is negative 1% — you're losing purchasing power every year.

Stocks deliver roughly 6–7% real return over long periods. Bonds deliver 1–3% real. Cash and short-term Treasury bills generally match inflation over long periods, meaning they preserve but don't grow purchasing power.

What return do I need to beat inflation?

Your return must exceed inflation to grow purchasing power. Historical long-run inflation in developed economies averages 2–4%. Recent years have run higher (2021–2023 saw 5–9% in many countries). Asset classes vs inflation:

• Cash/HYSA: Usually matches or slightly trails
• Bonds: Usually slightly beats over decades
• Stocks: Substantially beats over decades, with high year-to-year volatility
• Real estate: Usually beats over decades, location-dependent

Inflation isn't uniform

The headline CPI is a weighted average of a basket of goods and services. Your personal inflation rate depends on what you actually buy. Categories that consistently inflate faster than CPI: healthcare (US), education, childcare, housing in supply-constrained cities. Categories that often inflate slower or deflate: electronics, durable goods, some commodities. If a large share of your budget goes to high-inflation categories, your effective rate is higher than the headline number.

Common mistakes

• Comparing prices across decades using nominal dollars. $50,000/year in 1980 is over $200,000/year in 2024 purchasing power.
• Ignoring inflation in retirement projections. A $2M nest egg in 30 years is not $2M in today's purchasing power.
• Holding too much cash long-term. Cash is for short-term safety, not long-term storage of value.
• Assuming low-rate environments persist. 2008–2021 saw historically low inflation; 2022 onward reminded everyone that's not guaranteed.

What this calculator doesn't cover

• Regional inflation rate variation
• Hedonic adjustments and substitution effects in CPI methodology
• Currency depreciation as a form of imported inflation
• Asset price inflation (housing, stocks) which CPI does not track
• Personal inflation rates for specific spending patterns