What is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. When inflation is high, each unit of currency buys fewer goods and services than it did in previous years.
How This Calculator Works
- Main Calculator: Uses compound inflation formula to estimate how much money you need in the future to have the same purchasing power as today (or vice versa).
- Forward Flat Rate: Projects the future value of money after applying a constant annual inflation rate.
- Backward Flat Rate: Calculates what an amount today was worth in the past, adjusting for inflation.
Key Formula
Future Value = Present Value × (1 + inflation_rate)years
Past Value = Present Value / (1 + inflation_rate)years
Important Notes
- Inflation rates vary significantly over time and between countries.
- This calculator uses a constant rate for simplicity. Real-world inflation is rarely constant.
- The "Average Annual Inflation Rate" shown is a simplified compound rate between two periods.