Inflation Calculator
Calculate how inflation affects money over time. See what past dollars are worth today.
Inflation measures how prices increase over time, reducing what your money can buy. The US Federal Reserve targets about 2% annual inflation as healthy for the economy.
Inflation Impact on Common Items
| Item | 1970 | 1990 | 2024 | Increase |
|---|---|---|---|---|
| Gallon of Gas | $0.36 | $1.15 | $3.50 | +872% |
| Movie Ticket | $1.55 | $4.22 | $11.75 | +658% |
| Dozen Eggs | $0.62 | $1.00 | $3.00 | +384% |
| New Car (avg) | $3,500 | $15,000 | $48,000 | +1271% |
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About This Calculator
The Inflation Calculator reveals the hidden erosion of your money's purchasing power over time. That crisp $100 bill from 1990? It only buys what $60 could purchase back then. As of late 2025, annual inflation stands at 2.7%—down from the 9.1% peak in June 2022, but still eroding your dollars. Whether you're negotiating a salary, planning retirement, or curious about historical prices, this calculator uses official Consumer Price Index (CPI) data to show exactly how inflation has transformed money's value.
Understanding inflation isn't academic—it's essential for smart financial decisions. With the 2026 Social Security COLA set at 2.8% and the Federal Reserve targeting sustained 2% inflation, planning for purchasing power loss is crucial for anyone building long-term wealth.
How to Use the Inflation Calculator
- 1Enter the dollar amount you want to adjust for inflation—this can be a historical salary, old purchase price, or amount to project forward.
- 2Select the starting year for your calculation (data available from 1913 when systematic inflation tracking began).
- 3Choose the ending year to see the adjusted value in that year's dollars.
- 4Review the inflation-adjusted amount and the cumulative inflation rate between your selected years.
- 5Use the "purchasing power lost" display to understand real value erosion.
- 6Compare multiple time periods to see how inflation rates have varied across economic eras.
- 7Apply results to salary negotiations, retirement planning, or historical price comparisons.
Formula
Adjusted Value = Original Value x (CPI in End Year / CPI in Start Year)The Consumer Price Index (CPI) measures the average change in prices paid by urban consumers for a basket of goods and services. By comparing CPI values between two years, we calculate exactly how much more (or less) money is needed to maintain the same purchasing power.
Current Inflation Landscape (2025-2026)
After the post-pandemic inflation surge, the US economy has largely normalized:
Recent Inflation Trajectory:
| Period | Annual Inflation | Key Drivers |
|---|---|---|
| June 2022 | 9.1% | Peak post-COVID |
| December 2023 | 3.4% | Declining energy |
| June 2024 | 3.0% | Gradual cooling |
| December 2024 | 2.9% | Near target |
| November 2025 | 2.7% | Sustained moderation |
November 2025 Component Breakdown:
- Energy: +4.2% (gasoline +0.9%, fuel oil +11.3%)
- Food: +2.6%
- Shelter: +4.8% (lagging indicator)
- Core (ex-food/energy): +2.6%
What's Driving Current Inflation:
- Shelter costs remain elevated (slow to adjust)
- Energy volatility (geopolitical factors)
- Services inflation (wage pressures)
- Goods deflation helping offset (lower import prices)
2026 Outlook: The Federal Reserve projects inflation returning to the 2% target by late 2026. Most economists expect 2.3-2.8% average inflation through 2026, barring major supply shocks or geopolitical events.
The CPI Formula Explained (Math Under the Lid)
The inflation calculation uses the Consumer Price Index (CPI), a government-tracked measure of price changes for everyday goods and services.
The Inflation Adjustment Formula:
Adjusted Value = Original Value x (CPI End Year / CPI Start Year)
Understanding CPI Base Years:
- The BLS sets CPI = 100 for the base period (1982-1984 average)
- CPI of 200 means prices have doubled since the base period
- CPI of 315+ (late 2025) means prices are 3.15x higher than 1982-84
Example Calculation: $50,000 salary from 2000 to 2025
- CPI in 2000: 172.2
- CPI in 2025: ~316
- Adjusted Value = $50,000 x (316 / 172.2) = $91,750
That $50,000 salary from Y2K would need to be nearly $92,000 today just to maintain the same purchasing power!
Inflation Rate Formula:
Inflation Rate = ((CPI End - CPI Start) / CPI Start) x 100%
Real Purchasing Power Formula:
Real Value = Nominal Value / (1 + Cumulative Inflation Rate)
This helps determine if your raise actually made you richer, or if inflation consumed it.
Historical Inflation: Wild Periods and Lessons
Inflation has shaped history in dramatic ways. These stories reveal why understanding inflation matters.
The $100 Trillion Banknote: Zimbabwe (2008) Zimbabwe printed a $100 trillion banknote—the highest denomination ever. Inflation hit 79.6 billion percent per month. Prices doubled every 24.7 hours. Workers demanded payment twice daily because money lost value by lunchtime. Today, these worthless bills sell as collectibles for $50-100 USD.
Weimar Germany (1923) Post-WWI Germany saw hyperinflation so extreme that people burned money for heat (cheaper than firewood). The exchange rate went from 4.2 marks per dollar to 4.2 trillion marks per dollar in four years.
US Inflation History:
| Era | Peak Rate | Cause |
|---|---|---|
| 1920 | 23.7% | Post-WWI |
| 1947 | 14.4% | Post-WWII |
| 1980 | 13.5% | Oil crisis |
| 2022 | 9.1% | Post-COVID |
Cumulative Impact Over Time:
| Year | $100 Then | Value in 2025 |
|---|---|---|
| 1960 | $100 | $1,060 |
| 1980 | $100 | $380 |
| 1990 | $100 | $240 |
| 2000 | $100 | $184 |
| 2010 | $100 | $145 |
| 2020 | $100 | $122 |
Translation: Your grandparents' $100 had the buying power of over $1,000 today.
Real-World Inflation Examples That Matter
These examples show how inflation impacts actual financial decisions.
Example 1: The Minimum Wage Reality Check
- 1968 minimum wage: $1.60/hour
- Inflation-adjusted to 2025: $14.50/hour
- Current federal minimum: $7.25/hour
- Real purchasing power lost: 50%
Someone working minimum wage in 1968 had more buying power than today's federal minimum wage workers.
Example 2: College Tuition Explosion
- Harvard tuition 1970: $2,600/year
- Inflation-adjusted to 2025: $21,000
- Actual Harvard tuition 2025: $59,950
- Tuition grew 185% faster than inflation
Example 3: Housing Cost Comparison
- Median home price 1990: $79,100
- Inflation-adjusted to 2025: $190,000
- Actual median home 2025: $420,000+
- Housing rose 120% faster than general inflation
Example 4: Salary Negotiation Power
- Your salary in 2020: $75,000
- To maintain purchasing power in 2025: $91,500
- If you received 3% annual raises: $87,000
- Real income LOSS: $4,500/year
Example 5: Retirement Planning Reality
- $1 million goal set in 2000
- Inflation-adjusted need in 2025: $1,840,000
- In 2045 (at 3% inflation): $3,400,000
What seemed like a fortune 25 years ago won't provide the lifestyle you imagined.
Types of Inflation and Their Causes
Understanding inflation types helps you predict and protect against purchasing power erosion.
Demand-Pull Inflation When too much money chases too few goods. Example: stimulus checks during COVID-19 increased demand while supply chains were disrupted.
Cost-Push Inflation When production costs rise, pushing prices higher. Example: oil price shocks in the 1970s raised prices for everything as transportation costs surged.
Built-In Inflation The wage-price spiral: prices rise, workers demand higher wages, businesses raise prices to cover wages. This creates momentum that's hard to stop.
Asset Inflation When prices rise for investments (stocks, real estate) but not everyday goods. CPI might show 3% while home prices surge 15%.
Inflation Rate Categories:
| Category | Annual Rate | Effect |
|---|---|---|
| Deflation | < 0% | Prices falling |
| Low Inflation | 1-2% | Healthy, Fed target |
| Moderate | 3-4% | Manageable erosion |
| High | 5-9% | Painful, action needed |
| Very High | 10-50% | Economic stress |
| Hyperinflation | > 50%/month | Currency collapse |
The Fed's Target: The Federal Reserve targets 2% annual inflation as "healthy." This controlled erosion encourages spending/investing over hoarding cash while remaining manageable for planning.
Shrinkflation and Hidden Inflation
Modern inflation often hides in plain sight through product downsizing:
The Great Shrinkflation (2020-2025) Instead of raising prices, companies shrink products:
| Product | Old Size | New Size | Hidden Increase |
|---|---|---|---|
| Doritos | 9.75 oz | 9.25 oz | +5.4% |
| Gatorade | 32 oz | 28 oz | +14.3% |
| Bounty | 165 sheets | 147 sheets | +12.2% |
| Tillamook Ice Cream | 56 oz | 48 oz | +16.7% |
| Angel Soft | 425 sheets | 320 sheets | +32.8% |
Why Companies Choose Shrinkflation:
- Consumers notice price changes more than size changes
- Shelf space and packaging remain constant
- Psychological pricing ($3.99) can be maintained
- Less negative publicity than price hikes
Skimpflation: The Invisible Cousin Beyond shrinking products, quality degradation hides inflation:
- Thinner toilet paper plies
- Less active ingredients in cleaners
- Reduced customer service staffing
- Longer wait times for appointments
How to Fight Back:
- Calculate unit prices (price per ounce/count)
- Compare store brands to national brands
- Track receipt history for your regular items
- Report shrinkflation to consumer advocacy groups
Protecting Your Wealth from Inflation
Strategies to maintain and grow purchasing power over time:
Investment Options by Inflation Protection:
| Strategy | Inflation Protection | Risk Level | Liquidity |
|---|---|---|---|
| I Bonds | Excellent (CPI-linked) | Very Low | 1-year hold |
| TIPS | Excellent (CPI-linked) | Low | High |
| Stocks | Good (long-term) | Medium-High | High |
| Real Estate | Good | Medium | Low |
| Commodities | Variable | High | Medium |
| High-Yield Savings | Moderate (4-5% APY) | Very Low | High |
| Traditional Savings | Poor (0.01-0.5%) | Very Low | High |
I Bonds (Series I Savings Bonds):
- Current composite rate: ~5.27% (as of late 2025)
- $10,000 annual purchase limit per SSN
- Must hold 12 months minimum
- Penalty: 3 months interest if redeemed before 5 years
Treasury Inflation-Protected Securities (TIPS):
- Principal adjusts with CPI
- Pay fixed interest on adjusted principal
- Available in 5, 10, and 30-year terms
- Can be purchased directly from TreasuryDirect
The Real Return Formula:
Real Return = Nominal Return - Inflation Rate
A 7% stock market return during 3% inflation = 4% real return. A 0.5% savings account during 3% inflation = -2.5% real return (wealth destruction).
Pro Tips
- 💡When negotiating salary, always think in real dollars. A 2% raise during 2.7% inflation is actually a 0.7% pay cut in purchasing power. Aim for raises that exceed inflation by at least 1-2%.
- 💡Set retirement savings goals in future dollars. If you need $50,000/year today and retire in 25 years, plan for $105,000/year (assuming 3% inflation) to maintain the same lifestyle.
- 💡Keep only 3-6 months of expenses in cash savings. Beyond your emergency fund, uninvested cash loses 2-3% of purchasing power annually—put long-term savings in inflation-beating investments.
- 💡Use the Rule of 70 for inflation impact: divide 70 by the inflation rate to see years until prices double. At 3% inflation, prices double every 23 years; at 7%, only 10 years.
- 💡Consider I Bonds for inflation protection—currently yielding around 5.27% and linked to CPI. You can purchase up to $10,000 annually per Social Security number.
- 💡Review fixed-rate debt as an inflation hedge. A 30-year mortgage at 3% from 2021 becomes "cheaper" over time as inflation erodes the real value of payments.
- 💡Calculate unit prices when shopping to detect shrinkflation. A "sale" on a smaller package may actually cost more per ounce than the previous regular price.
- 💡Check your salary against cumulative post-COVID inflation. Prices are up ~22% since January 2020—has your income kept pace?
- 💡Include inflation assumptions in all long-term financial projections: college savings, retirement planning, large purchases, and estate planning.
- 💡Monitor the Fed's inflation targets and projections—these influence interest rates on savings, mortgages, and other financial products that affect your wealth.
- 💡Remember that CPI may not reflect your personal inflation rate - if you spend heavily on categories rising faster than average (healthcare, education), your real inflation is higher.
- 💡Lock in fixed-rate debt during low-rate environments - a 30-year fixed mortgage at low rates becomes cheaper in real terms as inflation erodes the principal over time.
- 💡When comparing historical wages or prices, always adjust for inflation to get an accurate picture of real value changes.
- 💡Diversify inflation protection across I Bonds, TIPS, stocks, and real assets rather than relying on a single strategy.
- 💡Pay attention to category-specific inflation in your budget - healthcare and education have outpaced general inflation for decades.
- 💡Consider Series EE savings bonds for long-term education planning - they double in value if held 20 years, guaranteeing a 3.5% return.
- 💡Build inflation assumptions into major purchase decisions - a car that costs $35,000 today will cost $45,000+ in 10 years at 3% inflation.
- 💡Use Social Security benefit statements (available at ssa.gov) to track your estimated benefits, which are inflation-adjusted through annual COLA increases.
- 💡Consider real estate investment trusts (REITs) as an inflation hedge - property values and rents typically rise with inflation over time.
- 💡Review your bond portfolio duration during high inflation - longer-term bonds suffer more when rates rise to combat inflation.
- 💡Track the Fed Funds Rate as an inflation indicator - rising rates signal the Fed is fighting inflation, affecting borrowing costs across the economy.
- 💡When evaluating job offers, calculate total compensation in real dollars including benefits, not just nominal salary figures.
- 💡Set up automatic investment increases tied to your raise schedule to maintain real investment growth against inflation.
- 💡Consider Treasury Floating Rate Notes (FRNs) for short-term inflation protection - their yields adjust quarterly based on 13-week T-bill rates.
- 💡Use inflation-adjusted return calculators when comparing investment performance across different time periods for accurate analysis.
- 💡Remember that deflation (negative inflation) has its own risks - it discourages spending and investment while making debt more expensive in real terms.
- 💡Keep a personal inflation tracker by logging prices of your regular purchases to understand how your actual cost of living differs from official CPI.
- 💡Consider COLA-adjusted pensions or annuities for retirement income to maintain purchasing power throughout your retirement years.
- 💡Monitor producer price index (PPI) as a leading indicator - wholesale price increases often flow through to consumer prices within 3-6 months.
- 💡Factor in lifestyle inflation (increasing spending as income rises) separately from economic inflation when planning long-term budgets.
- 💡Consider commodities ETFs or mutual funds for inflation hedging - gold, oil, and agricultural commodities often rise with general price levels.
- 💡Review your insurance coverage annually to ensure policy limits keep pace with inflation and replacement costs.
- 💡Use real estate as an inflation hedge through REITs if direct property ownership is not feasible - they provide inflation protection with liquidity.
- 💡Be aware that some fixed annuities and whole life insurance policies may not keep pace with inflation over long time horizons.
- 💡Track breakeven inflation rates (difference between regular Treasury and TIPS yields) as a market-based inflation expectation indicator.
- 💡Consider geographic arbitrage - moving to lower cost-of-living areas effectively increases your purchasing power without requiring higher income.
- 💡Keep copies of historical price receipts to build your own personal inflation database and identify spending categories where you face above-average price increases.
Frequently Asked Questions
As of November 2025, the annual US inflation rate is 2.7%, down from 9.1% at the June 2022 peak. Core inflation (excluding food and energy) has fallen to 2.6%—the lowest since March 2021. The Federal Reserve continues targeting 2% inflation, with expectations of reaching that target by late 2026.
