Inflation Calculator
Calculate the impact of inflation on the purchasing power of money over time. See how much a dollar from the past is worth today.
Purchasing Power Over Time
At 3.00% annual inflation, $1.00 in 2000 has the same purchasing power as $2.03 in 2024. That's a 103.28% increase in prices over 24 years.
What is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises, causing purchasing power to fall. A 3% annual inflation rate means that something costing $100 today will cost about $103 next year.
The Rule of 72 and Inflation
At 3% inflation, the purchasing power of money halves in about 24 years (72 / 3 = 24). This is why investing is important — to outpace inflation and preserve your wealth.
Frequently Asked Questions
What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises over time, causing purchasing power to fall. A 3% annual inflation rate means that something costing $100 today will cost about $103 next year.
How does inflation affect my savings?
Inflation erodes the real value of money over time. If inflation is 3% per year, $100,000 in savings today will only have the purchasing power of about $74,000 in 10 years. This is why investing is important to outpace inflation.
What causes inflation?
Inflation is caused by increased demand (demand-pull), rising production costs (cost-push), and increased money supply. Central banks manage inflation through monetary policy, primarily by adjusting interest rates.
What is the Rule of 72 for inflation?
The Rule of 72 helps estimate how quickly inflation halves your purchasing power. Divide 72 by the inflation rate: at 3% inflation, your money loses half its value in about 24 years (72 ÷ 3 = 24).
Disclaimer
This calculator is for informational purposes only and should not be considered financial advice. Consult with a qualified financial professional before making any financial decisions.