How to Calculate Inflation
5 min read · Updated September 26, 2026 · by Thomas M, Registered Investment Adviser (South Carolina)
Inflation is compound growth in prices, so it uses the same maths as compound interest. This guide shows three calculations: future cost, purchasing power and the rate implied by two prices.
Future cost
Future cost = price × (1 + r)years. $1,000 today at 3% for 10 years: $1,343.92.
Purchasing power
Buying power = amount ÷ (1 + r)years. $1,000 held for 10 years at 3% buys what $744.09 buys today.
The rate between two prices
Rate = (later ÷ earlier)1/years − 1. A $12 meal that costs $17.50 ten years later implies 3.85% a year.
Rule of 72 and real returns
Years for prices to double ≈ 72 ÷ the rate. And the real return is (1 + nominal) ÷ (1 + inflation) − 1: 6% growth with 3% inflation is about 2.9% real.
Practice questions
Test yourself, then tap to check. Answers are calculated by the tools linked below.
- What will a $250 weekly food bill be after 15 years of 3.5% inflation?
Show answer
What costs $250.00 today will cost in 15 years: $418.84
- $5,000 at 5% compounded yearly for 15 years, no contributions.
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Future value: $10,394.64
- A 40-year-old has $80,000, saves $800 a month, expects 6% growth and 2.5% inflation and retires at 65. What will the pot be worth in today’s money?
Show answer
Projected savings at retirement: $911,592.75 · In today’s money (inflation-adjusted): $491,704.55
Frequently asked questions
How do I calculate inflation over time?
Multiply by (1 + rate) for each year: amount × (1 + r)^years.
What is purchasing power?
What a sum of money can buy; inflation reduces it over time.
What is the real rate of return?
The return after inflation: (1 + nominal) ÷ (1 + inflation) − 1.
How do I find the inflation rate from two prices?
Take the ratio of the later price to the earlier price, raise it to 1/years and subtract 1.
Try it yourself
Inflation CalculatorSee what money will be worth after inflation, what things will cost later, or the average inflation implied by two prices.Compound Interest CalculatorSee how savings grow with compounding and regular contributions.Retirement CalculatorProject your retirement savings, see the income they could provide in today’s money and what you need to save to hit your goal.Keep learning
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