How it works

Inflation compounds like interest, just working against you. The future cost of the same goods is A × (1 + r)y, while the future purchasing power of today's money is A ÷ (1 + r)y.

The gap between what you have and what things cost is the purchasing power you quietly lose to inflation over time — which is why cash left idle tends to shrink in real terms.

Worked example

At 3% average inflation, something costing $1,000 today would cost about $1,806 in 20 years. Put another way, today's $1,000 would buy only about $554 worth of goods by then.

Frequently asked questions

What inflation rate should I use?
Long-run averages in many developed economies sit around 2–3%, but recent years have varied. Try a range to see best and worst cases.

Is this official inflation data?
No — it's a projection based on the average rate you enter, not live CPI figures. It's designed to stay fully private with no external data calls.

Why do investments matter here?
Because beating inflation is the point of investing. Compare this against the compound interest calculator to see the difference.