Inflation Calculator

Understanding Inflation and Purchasing Power

Inflation measures the rate at which prices for goods and services rise over time, reducing the purchasing power of each dollar. A dollar today buys less than it did a decade ago, and understanding this erosion is critical for long-term financial planning, retirement savings, and investment decisions.

This calculator uses real Consumer Price Index (CPI-U) data published by the Bureau of Labor Statistics, covering every year from 1928 through 2023 -- a span of 95 years that includes the Great Depression, World War II, the stagflation of the 1970s, and the post-pandemic inflation surge. Rather than relying on assumed averages, the historical mode compounds actual year-by-year inflation figures so your results reflect what really happened.

The future projection mode lets you estimate how today's dollars will lose value at a given annual inflation rate. The default rate is pre-filled with the historical average (3.1% per year), but you can adjust it to model higher or lower inflation scenarios. Both modes express results in nominal dollars -- the numbers you would actually see on price tags or bank statements in the target year.

How the Calculation Works

For historical calculations, we build a cumulative CPI index starting at 1.0 in 1928. Each subsequent year's index is the previous year multiplied by (1 + that year's inflation rate). To convert an amount between two years, we multiply by the ratio of the end year's index to the start year's index. The annualized rate is derived using the compound annual growth rate (CAGR) formula.