Inflation Calculator
Find out what an amount of money from a past year would be worth today, adjusted for average inflation.
What inflation actually measures
Inflation is the rate at which the general price level of goods and services rises over time, which correspondingly reduces the purchasing power of a fixed amount of money. A dollar today buys less than the same dollar bought a decade ago, because the average cost of goods and services has risen over that period. This calculator estimates how that erosion of purchasing power compounds over a chosen number of years, using an assumed average annual inflation rate.
Why inflation compounds rather than adds up
Inflation doesn't accumulate in a simple additive way — 3% inflation for 10 years doesn't mean prices rose by a flat 30%. Instead, each year's inflation applies to the already-inflated price level from the previous year, compounding similarly to how interest compounds on a savings account. Over long time periods, this compounding effect means even a modest average annual inflation rate can meaningfully erode purchasing power.
Why actual historical inflation varies year to year
Real-world inflation isn't a flat, constant rate — some years see inflation well above the long-run historical average, while other years see very little inflation or even brief periods of deflation. This calculator uses a single assumed average rate for simplicity, which is useful for a rough long-term estimate, but won't precisely match what actual government inflation data (like the Consumer Price Index) would show for any specific historical period, since real inflation fluctuated year to year rather than following a smooth constant curve.
Is this based on official CPI data?
No - this uses a single assumed average rate you can adjust, rather than pulling actual historical CPI data year by year, so treat the result as a rough estimate rather than a precise historical figure.
What's a typical long-run inflation rate to assume?
A commonly cited long-run average for the US is around 3% annually, though actual rates have varied significantly across different decades and economic periods, sometimes running much higher or lower than that average for extended stretches.
Why would I calculate this for a past purchase?
This is often used to put historical prices or wages in context — for example, understanding what a home price or salary from several decades ago would be equivalent to in today's dollars, to get a more meaningful sense of its real value at the time.