Inflation Calculator
Inflation Calculator
What something costing a given amount today will cost after a number of years at the inflation rate you choose, what the same money will buy then, and the rate implied by two prices years apart.
Future cost
$1,00,000 of spending today, 4% inflation, 10 years
Future cost, purchasing power and the implied rate
- A
- the amount today
- f
- the yearly inflation rate, as a decimal
- n
- the number of years
Worked example
$1,00,000 of spending today, 4% inflation, 10 years
1.0410 = 1.4802
Future cost = 1,00,000 × 1.4802 = $1,48,024
The same $1,00,000 will buy what $67,556 buys today: 32.4% less
Implied rate: a price of 50 eight years ago and 80 now is (80 ÷ 50)1/8 − 1 = 6.05% a year
What 1,00,000 of spending today costs later
| Inflation | 5 years | 10 years | 20 years | Buying power after 20 years |
|---|---|---|---|---|
| 2% | $1,10,408 | $1,21,899 | $1,48,595 | $67,297 |
| 4% | $1,21,665 | $1,48,024 | $2,19,112 | $45,639 |
| 6% | $1,33,823 | $1,79,085 | $3,20,714 | $31,180 |
| 8% | $1,46,933 | $2,15,892 | $4,66,096 | $21,455 |
Your rate, not the official record
This calculator projects forward at a single, steady inflation rate that you choose. It does not use historical consumer price index (CPI) data, so it cannot tell you what a sum from 1995 is worth today. For that you need the official index: in India, the CPI published by the National Statistics Office under the Ministry of Statistics and Programme Implementation. What you can do here is use two prices you know, such as your rent or a school fee some years ago and today, and read off the average yearly rate they imply. A fee of 50 eight years ago and 80 now is 6.05% a year.
The default follows your currency’s central-bank target, which for India is the Reserve Bank’s 4% CPI target. Targets are not forecasts, and actual inflation has often run above them, so try a higher figure as well. The things you personally buy can also rise faster than the average: education and healthcare often do.
Inflation works two ways at once. At 4% a year, $1,00,000 of spending today costs $1,48,024 in ten years; seen from the other side, $1,00,000 kept as cash will then buy what $67,556 buys now. The chart draws both, with your unchanged money between them. That gap is why savings need to earn more than inflation just to stand still, and why a target set in today’s money should be raised before you plan for it. For that, use the savings goal calculator or the SIP goal calculator; to see how fast prices double, the rule of 72 calculator; for retirement, the retirement corpus calculator. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How do I calculate the future cost of something?
Multiply today’s cost by (1 + inflation)years. $1,00,000 at 4% for 10 years becomes $1,48,024.
Does this calculator use actual historical inflation?
No. It uses the rate you enter, held steady. For past inflation in India, use the official CPI published by the National Statistics Office (MoSPI).
How do I find the inflation rate between two prices?
Divide the new price by the old, take the result to the power 1 ÷ years, and subtract 1. 50 rising to 80 over eight years is 6.05% a year.
What is purchasing power?
What a sum of money can buy. At 4% inflation, $1,00,000 in ten years buys what $67,556 buys today.
Related calculators
References
- Central-bank inflation targets used as default inflation by currency: Reserve Bank of India (4% CPI, flexible inflation targeting framework); U.S. Federal Reserve (2% PCE); European Central Bank (2%); Bank of England (2% CPI); Bank of Canada (2%); Reserve Bank of Australia (2–3%); Bangko Sentral ng Pilipinas (3% ± 1). Actual inflation often runs above target.
- Ministry of Statistics and Programme Implementation (MoSPI), National Statistics Office. Consumer Price Index (CPI) press releases — the official record of past inflation in India, which this page does not use.
- Brealey RA, Myers SC, Allen F. Principles of Corporate Finance. McGraw-Hill. Compound interest, effective annual rates, continuous compounding and the future value of an annuity.