Inflation Calculator
See how the purchasing power of money changes over time using Consumer Price Index (CPI) values from two periods.
Frequently Asked Questions
What is inflation and how is it measured?
Inflation is the general rise in prices over time, causing money's purchasing power to fall. It is most commonly measured by the Consumer Price Index (CPI) — a basket of typical goods and services tracked monthly. The US Federal Reserve and Bank of England target 2% annual inflation as optimal for economic stability. Actual US CPI peaked at 9.1% in June 2022 and has since fallen back toward 3%.
How does the CPI inflation calculator work?
Inflation-adjusted value = Original amount × (CPI in end period ÷ CPI in start period). Example: $1,000 in 2000 (CPI 172.2) is equivalent to $1,000 × (314.2 ÷ 172.2) = $1,825 in 2024. This means $1,000 in 2000 has the same purchasing power as $1,825 today — prices rose 82.5% over that period.
What is the difference between CPI and RPI?
CPI (Consumer Price Index) excludes housing costs and is the UK's official inflation target measure. RPI (Retail Price Index) includes mortgage interest payments and historically runs 0.5–1% higher than CPI. The UK government uses CPI for most inflation-linked benefits and state pension increases, but uses RPI for student loan interest and some gilts (government bonds).
How does inflation affect savings and wages?
If your savings earn 2% APY but inflation is 4%, your real return is −2% — your purchasing power shrinks even though the balance grows. The "real interest rate" = Nominal rate − Inflation rate. To protect savings, keep liquid emergency funds in high-yield accounts or I-bonds. For wages: real wage growth = salary increase % minus inflation %. A 3% raise during 5% inflation is effectively a 2% pay cut.
What causes high inflation and how is it controlled?
Inflation is caused by demand-pull (too much money chasing too few goods), cost-push (rising production costs like oil or wages), and monetary expansion (excessive money printing). Central banks control inflation primarily by raising interest rates, which increases borrowing costs and reduces consumer and business spending. The 2021–2023 inflation surge was driven by supply chain disruptions, energy prices, and pandemic stimulus spending.