Inflation Calculator [2026]
Calculate future price increases, purchasing power erosion of cash savings, price doubling timelines via the Rule of 72, and real inflation-adjusted investment returns.
Inflation Formulas & Purchasing Power Mechanics
Inflation measures the rate at which the general level of prices for goods and services rises, eroding the purchasing power of fiat currency. To preserve real wealth, investment yields must outpace inflation after taxes.
P = Present Price • i = Annual Inflation Rate • t = Horizon Years
Demonstrates how much actual purchasing capacity remains in uninvested cash.
At 3% inflation, prices double in 24 years; at 6% inflation, prices double in 12 years.
Inflation & Time HorizonCPI math
What requires $10,000 today will cost $13,702.41 in 10 years (+37.0%)
Purchasing Power Erosion Trajectory (at 3.2% Inflation)
| Timeline | Future Cost of Goods | Remaining Purchasing Power | Cumulative Wealth Lost |
|---|---|---|---|
| Year 1 | $10,320 | $9,689.92 | -3.1% |
| Year 2 | $10,650.24 | $9,389.46 | -6.1% |
| Year 3 | $10,991.05 | $9,098.31 | -9.0% |
| Year 4 | $11,342.76 | $8,816.2 | -11.8% |
| Year 5 | $11,705.73 | $8,542.83 | -14.6% |
| Year 10 | $13,702.41 | $7,297.99 | -27.0% |
Frequently Asked Questions About Inflation & Purchasing Power
What is the formula to calculate inflation over time?↓
Future price is calculated using the compound interest formula: Future Value = Present Value × (1 + i)^t, where i is the annual inflation rate as a decimal and t is the number of years. For example, at 3.0% annual inflation, an item costing $100 today will cost $100 × (1.03)^10 = $134.39 in 10 years.
How does inflation affect the purchasing power of cash savings?↓
Inflation silently erodes purchasing power because each dollar buys fewer goods and services over time. Real Purchasing Power equals Present Value ÷ (1 + i)^t. For example, $10,000 sitting in a zero-interest checking account under 3.2% annual inflation will have only $7,298 of real purchasing power remaining after 10 years, suffering a 27.0% loss in real wealth.
What is the Rule of 72 for inflation?↓
The Rule of 72 estimates how many years it will take for prices to double due to inflation: Doubling Time = 72 ÷ Annual Inflation Rate. For example, at 3.0% annual inflation, prices will double in approximately 24 years (72 ÷ 3). At 6.0% inflation, prices double in just 12 years.
What investment return is needed to beat inflation?↓
To generate positive real wealth, your nominal investment return must exceed the sum of inflation and taxes. Using the Fisher Equation (Real Return ≈ Nominal Return − Inflation Rate), if inflation is 3.0%, you must earn over 3.0% after taxes just to maintain purchasing power. Earning 8.0% annually in index funds produces an approximate 5.0% real growth rate above inflation.
Authored by Arham Bilal
Formulas calibrated against Bureau of Labor Statistics (BLS) Consumer Price Index (CPI-U) historical series and Federal Reserve monetary purchasing power models.
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