Inflation Calculator
Inflation is compounding in reverse: a steady rate quietly halves what money buys over a couple of decades. Enter an amount, a span of years, and an average rate to see the equivalent figure and the purchasing power lost.
Amount & Period
Use an average annual rate for the period. Long-run US CPI has averaged roughly 3%.
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Two different questions, one formula
“What will $1,000 be worth in twenty years?” and “what would $1,000 from 2006 be worth now?” are the same calculation run in opposite directions. Forward, you divide by the compounding factor to get real value. Backward, you multiply to get the nominal equivalent. Mixing the two is the most common mistake in salary and pension discussions.
Why 3% does not feel like 3%
Compounding is the reason. At 3%, prices double in about 23 years — the rule of 70 divided by the rate gives a close approximation. A salary that has not moved in a decade has quietly lost roughly a quarter of its buying power even though the number on the payslip never fell.
Averages hide the shape
A single average rate across a long period smooths over the years that actually mattered. The early 1980s and the early 2020s both ran far above trend. For a precise historical conversion you want year-by-year index values; for planning and for salary arguments, an average is the right tool and this is it.
How the maths works
Real value forward is A / (1 + r)n; nominal equivalent
backward is A × (1 + r)n. The halving time uses
ln(2) / ln(1 + r), which is the exact form of the rule of 70.