Inflation Calculator

Inflation is the rate at which the general price level rises over time, reducing purchasing power. If inflation is 3%, something that costs $100 today will cost $103 next year. The dollar buys less as prices rise.

The US CPI (Consumer Price Index) has averaged about 3.1% annually since 1913. The 1970s saw high inflation (10%+). The 2021-2023 period saw post-pandemic spikes of 7-9%. The Federal Reserve targets 2% annual inflation.

If your savings earn less interest than the inflation rate, you lose purchasing power. $10,000 in a 0.5% savings account during 3% inflation loses ~$250 of real value per year. This is why holding too much cash long-term is risky.

Hyperinflation is extremely rapid inflation, typically above 50% per month. Historical examples include Germany (1923), Zimbabwe (2008), and Venezuela (2018). It destroys savings and economic stability.

Invest in assets that typically outpace inflation: stocks (historically ~7% real return), real estate, Treasury Inflation-Protected Securities (TIPS), I-Bonds (inflation-indexed savings bonds), and commodities. Holding only cash or low-yield bonds loses ground to inflation over time.