What is inflation and how does it affect purchasing power?

Inflation is the rate at which the general level of prices for goods and services rises over time, reducing the purchasing power of money. If inflation is 3% per year, something that costs $100 today will cost $103 next year.

How is the inflation rate calculated?

The most common measure is the Consumer Price Index (CPI), which tracks the price changes of a basket of consumer goods and services. The inflation rate is the percentage change in CPI from one period to another.

What is the difference between nominal and real value?

Nominal value is the face value of money without adjusting for inflation. Real value adjusts for inflation to reflect true purchasing power. For example, a $50,000 salary in 2000 has a different real value than $50,000 in 2024.

How much will $1,000 be worth in 10 years with 3% inflation?

With 3% annual inflation, $1,000 today will have the purchasing power of approximately $744 in 10 years. Use the formula: Future Value = Present Value / (1 + inflation rate)^years.

Inflation Calculator - Purchasing Power Over Time

How to use this calculator

Use the CPI Calculator to convert dollar values between any two years using real U.S. inflation data. Use the Forward calculator to project future purchasing power, or the Backward calculator to find what today's money was worth in the past.

Inflation Calculator with U.S. CPI Data

Calculates the equivalent value of the U.S. dollar in any year from 1913 to 2025, based on historical Consumer Price Index (CPI) data.

Amount

The dollar amount to adjust for inflation

From

Starting year (and optionally month)

Target year (and optionally month)

U.S. CPI History (1950–2025)

Forward Flat Rate Inflation Calculator

Calculates an inflation-adjusted amount based on a fixed average inflation rate after a number of years.

Amount

Starting dollar amount

Inflation Rate

Average annual inflation rate

After

Number of years into the future

years

Backward Flat Rate Inflation Calculator

Calculates the equivalent purchasing power of an amount some years ago based on a certain average inflation rate.

Amount

Current dollar amount

Inflation Rate

Average annual inflation rate

Years Ago

How many years in the past

years

About Inflation

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. The Consumer Price Index (CPI) is the most widely used measure of inflation in the United States, published monthly by the Bureau of Labor Statistics.

Purchasing Power refers to the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. As inflation rises, purchasing power falls — meaning your money buys less over time.

Historical context: The U.S. has experienced an average annual inflation rate of approximately 3.1% since 1913. The highest inflation periods were during World War I (1917–1920), World War II (1941–1948), and the 1970s oil crisis (1973–1981).

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Inflation Tips

→The U.S. Federal Reserve targets 2% annual inflation as its long-term goal.
→Inflation erodes fixed-income savings — consider inflation-protected securities (TIPS).
→Stocks historically outpace inflation over long periods, averaging ~7% real returns.
→Real estate and commodities are traditional inflation hedges.

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