Inflation Calculator
See how inflation erodes purchasing power over time.
Inflation Calculator
Use a custom inflation rate to estimate future costs or past-equivalent purchasing power.
Inflation reduces purchasing power when prices rise.
Use a custom inflation rate for projections.
Results are estimates based on the selected rate and years.
Optional: used only for the approximate real return comparison.
Estimated inflation-adjusted value
Based on £1,000.00, 3.00% annual inflation, and 10 years.
Purchasing power change
Estimated reduction in buying power.
Total price increase
Future cost minus starting amount.
Cumulative inflation
Total increase over the full period.
Annual inflation rate
Custom rate entered.
Start amount
Original amount entered.
Future cost
Amount needed to keep pace.
Today’s equivalent
Real buying power in today’s terms.
Time period
Projection length.
Approx. real return
Nominal return minus inflation.
Purchasing-power focused
Compare money across time by adjusting for inflation.
Projection-based
Future inflation is uncertain, so results are estimates based on your inputs.
Personal finance context
Use inflation estimates when planning budgets, savings goals, wages, and investments.
Dynamic Inflation Insights
What Inflation Means
General price rise
Inflation is the broad rise in prices over time.
Money buys less
When prices rise, each unit of currency buys less.
Budget impact
Inflation affects savings, wages, budgets, loans, and investments.
Not uniform
Not every product or service rises at the same rate.
Purchasing Power Explained
Nominal value
Nominal value is the stated amount of money, such as £1,000.00. It does not adjust for rising prices.
Real value
Real or inflation-adjusted value compares money across time by accounting for purchasing power.
Inflation Rate vs Price Increase
Annual rate
Inflation is often stated as a yearly percentage rate.
Cumulative inflation
Cumulative inflation is the full increase across many years.
Compounding effect
3% inflation for 10 years is more than 30% because inflation compounds.
Historical Inflation vs Assumed Inflation
Historical mode
Historical inflation requires a chosen CPI data source, country, basket, and time period.
Projection mode
This calculator uses an assumed annual rate entered by the user.
Uncertain future
Future inflation cannot be predicted exactly.
Personal experience
CPI reflects a basket of goods and may not match your personal spending exactly.
Inflation and Savings / Investments
Cash savings
Cash can lose purchasing power if interest earned is below inflation.
Investment returns
Investment returns are often compared with inflation to estimate real growth.
Real return
Approximate real return equals nominal return minus inflation rate.
Planning goals
Wages and savings goals may need inflation adjustment over time.
Inflation Timeline
| Year | Estimated cost | Cumulative inflation |
|---|---|---|
| 1 | £1,030.00 | 3.00% |
| 2 | £1,060.90 | 6.09% |
| 3 | £1,092.73 | 9.27% |
| 4 | £1,125.51 | 12.55% |
| 5 | £1,159.27 | 15.93% |
| 6 | £1,194.05 | 19.41% |
| 7 | £1,229.87 | 22.99% |
| 8 | £1,266.77 | 26.68% |
| 9 | £1,304.77 | 30.48% |
| 10 | £1,343.92 | 34.39% |
Inflation Formula
Future Cost = Present Cost × (1 + Inflation Rate)^Years
Purchasing Power = Amount ÷ (1 + Inflation Rate)^Years
Cumulative Inflation = [(Future Cost ÷ Present Cost) − 1] × 100
Approximate Real Return = Nominal Return − Inflation Rate