Inflation Calculator

An Introduction to Inflation and the Inflation Calculator

What is a “safe” amount of inflation?

Don’t think 2% inflation impacts planning? Think again. Inflation calculations using historical inflation rates or calculate impact using a projected rate.

• U.S. annual inflation rate data since 1913
• Multiple country inflation rates
• Calculates impact of inflation for any number of years
• Calculates reverse inflation

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As an investor or wage earner, do you believe that 2% will not hurt you? After all, that has been the Federal Reserve’s target for several years.

If so, you may be surprised to learn that if inflation averaged only 2% for 20 years (roughly half a working lifetime), a wage earner would need to earn more than 40% more today than they earned in 2006 just to maintain the same purchasing power. (In fact, the real figure is close to 50%.)

You might respond that, compared with the 1970s and early 1980s, the period from 1990 through 2020 experienced relatively low inflation, especially before 2022. It would seem unlikely that the average rate was even close to 2%.

However—

that conclusion is incorrect.

During the 30 years from 1996 through 2025, inflation as measured by the U.S. Consumer Price Index averaged slightly more than 2.5%. As a result, the purchasing power of the dollar declined by more than half.

The German inflation rate for 2025 is an initial estimate provided by the government in December 2025.

As shown above, inflation can significantly affect earnings and investments. An inflation calculator lets you see the impact based on your own situation.

Two common uses for this calculator illustrate the point.

A large share of workers has gone two, three, or more years without a raise. As the U.S. economy improved and unemployment fell below 5%, employers began competing to retain skilled workers by offering raises.

Historical Inflation

If you are in this situation, use the calculator to confirm that your raise increases purchasing power—that is, that it exceeds the rate of inflation.

The U.S. Census Bureau reports that as of 2024 (the latest available year), the median household income was $81,604. Use the historical inflation calculator to determine the income needed in 2026 to maintain the same purchasing power.

It is just over $86,000.

Historical inflation calculations are also helpful for retirement planning and investment planning.

Knowing historical inflation allows you to base future estimates on past experience.

Enter any date range to obtain the average rate of inflation. Then use that rate in the Retirement Calculator to optionally adjust pre-retirement income, post-retirement income, or both. (There have been periods of very low inflation and even deflation, as well as periods of higher inflation. Over many 20-year spans, the average is often between 2% and 3%, though not always.)

You can also use the future inflation calculator with the average rate to estimate the income needed in the first year of retirement.

As with the other calculators on this site, I reviewed competing tools and asked a simple question: “How can I design a better calculator?”

• Many inflation calculators use only historical data, or they let the user enter an assumed inflation rate. This calculator provides both options.
• This calculator displays historical inflation rate data.
• The calculator not only computes the future equivalent amount, but it also calculates today’s value. This value shows what it would be like to live on the same amount if it does not keep pace with inflation.

U.S. historical data comes from the Bureau of Labor Statistics, the source for the Consumer Price Index (CPI). The BLS recently changed its calculator to use monthly data instead of annual averages.

For planning purposes on this site, annual average CPI data is often more useful because monthly data can be volatile. If you want to run calculations using monthly data, or compare results, use the BLS Inflation Calculator (opens in a new tab).

And while we are on the topic…

Inflation is the change in prices, measured by a price index, over a defined period. The change is expressed as a percentage so that it can be compared across time. This percentage is the inflation rate reported in financial news.

If the rate is negative, the result is deflation—prices are falling.

When the inflation rate is still positive but declining, the economy experiences disinflation. For example, the U.S. annual rate was 3.3% in 2000, 2.8% in 2001, and 1.5% in 2002. Prices continued to rise, but at a slower pace.

In the past century there have been several episodes of severe inflation worldwide. Business Insider provides a summary of historical hyperinflation examples.

One well-known case occurred in Weimar Germany between August 1922 and December 1923. Business Insider reports that the daily inflation rate reached 21%.

More recently, Trading Economics reports that Venezuela’s annual inflation rate was 172% in April 2025 (year-over-year).

Many episodes of extreme or moderate inflation occur when governments print money to pay expenses. This explanation is common and is the traditional description of inflation’s cause.

Inflation can also result from the expansion of credit.

What is credit expansion?

Credit.

What does that mean?

It can take time to understand. Here is the concept, step by step.

When interest rates are low or falling and lenders are eager to lend, credit is considered “easy.” A recent example occurred before the housing crisis, when many borrowers obtained mortgages even with weak credit.

What happened?

Inflation. Housing prices increased.

When borrowers can finance purchases at a lower cost, they can afford to offer higher prices. Competing buyers can bid prices higher.

Financing an additional $10,000 over 30 years may raise the monthly payment only slightly. When credit is inexpensive and available, buyers can pay more. When credit tightens, they cannot.

As more buyers can pay more, prices rise.

We also see this pattern in higher education. When credit becomes widely available, schools have less pressure to keep prices low, and students continue to pay the higher price.

The result is higher education costs and many graduates burdened with debt.

Debt burdens can restrain spending. Young adults may delay forming households because they cannot afford housing. Economic growth slows.

These examples illustrate both causes and effects of inflation.

The calculator includes a country selector. If you can provide links to official inflation data for another country, those rates can be added to the calculator.

Please share links in the comments below.