About Inflation
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 dollar today will buy less in the future due to inflation.
How This Calculator Works
This calculator uses the compound interest formula to adjust money values for inflation:
Future Value = Present Value × (1 + inflation rate)^years
Historical US Inflation Rates
- 1960s-1970s: 2-6% average
- 1980s: 5-10% (high inflation period)
- 1990s-2000s: 2-3% average
- 2010s: 1-2% average (low inflation)
- 2020s: 2-8% (varied due to pandemic)
- Long-term average: ~3% per year
Use Cases
- Compare prices across different time periods
- Understand purchasing power changes
- Plan for retirement savings
- Evaluate historical salaries and wages
- Analyze investment returns in real terms
- Calculate cost of living adjustments
Examples
- $100 in 2000 = ~$175 in 2024 (3% inflation)
- $50,000 salary in 1990 = ~$115,000 in 2024
- $1 in 1950 = ~$12 in 2024
Important Notes
- This calculator uses a constant inflation rate for simplicity
- Actual inflation varies year by year
- Different goods inflate at different rates
- For precise historical data, use official CPI (Consumer Price Index) data
- Results are estimates and may not reflect actual purchasing power changes
Tips
- Use 3% as a general long-term average for US inflation
- Adjust the rate based on the specific time period
- Consider using official CPI data for more accuracy
- Remember that inflation affects different sectors differently