Utilz
Inflation Calculator
See how inflation changes the value of money over time
Why Use This Tool?
- Understand how inflation erodes the real value of money
- Plan savings and investments with purchasing power in mind
- See the equivalent value of any amount across different years
Calculation Formula
Real Value = Nominal Value / (1 + inflation_rate)^years. Adjusted Amount = Original Amount × (1 + inflation_rate)^years.
How to Use
- Enter the original amount
- Enter the start year and end year
- Enter the annual inflation rate (or use the default)
- View the inflation-adjusted value and purchasing power change
FAQ
How is inflation adjustment calculated?
The adjusted value is calculated using the formula: Adjusted Value = Original Amount × (1 + inflation rate)^years. This compounds the inflation rate over the time period.
What inflation rate should I use?
The long-term average inflation rate in the US is about 3% per year. Recent years have seen higher rates. Use 2-3% for conservative long-term estimates.
What does purchasing power mean?
Purchasing power refers to how much goods and services a given amount of money can buy. As inflation rises, the purchasing power of the same dollar amount decreases over time.
Can I use this to calculate deflation?
Yes. Enter a negative inflation rate to simulate deflation. For example, -1% means prices decrease by 1% per year, increasing purchasing power over time.
What causes inflation?
Inflation is primarily caused by increased money supply, higher demand than supply (demand-pull), rising production costs (cost-push), and inflation expectations. Central banks use interest rates to manage inflation targets.