Inflation is the rise in the general price level, which means each dollar buys a little less over time. At 3% a year, something that costs $100 today will cost about $134.39 in 10 years. Put the other way, $100 in 10 years will buy what $74.41 buys today.
The U.S. Bureau of Labor Statistics measures consumer inflation with the Consumer Price Index (CPI). Its most widely reported index is the CPI-U, the CPI for All Urban Consumers. To adjust a past amount to today's dollars, divide one CPI value by another; that is what the CPI mode does. The rate mode projects forward at a rate you choose.
How to use the inflation calculator
- Choose "Assumed annual inflation rate" to project a future cost, or "Two CPI index values" to adjust between two past dates.
- Enter the dollar amount.
- Rate mode: enter an annual rate and the number of years. CPI mode: look up the CPI-U for each date in the BLS database and enter both values, plus the years between them.
- Read the equivalent amount, the purchasing power, the total inflation and the average annual rate.
Formula
BLS uses the same idea to describe price change: the percent change between two index levels, not the difference in index points.
Worked example
Rate mode: $100 at 3% inflation for 10 years.
- Factor: 1.0310 = 1.343916.
- Future cost: $100 × 1.343916 = $134.39.
- Purchasing power: $100 ÷ 1.343916 = $74.41 in today's money.
CPI mode, using the BLS illustration of index change: an item with an index of 112.500 in year I and 121.500 in year II rose 9.0 ÷ 112.5 = 8.0%, so $100 at the first date equals $108.00 at the second.
Which inflation figure should I use?
For adjusting wages, prices or contracts in the U.S., BLS describes the CPI-U, U.S. city average, all items, 1982–84 = 100, not seasonally adjusted, as the standard series. For long-range planning, people often assume a steady 2–3% a year, but that is only an assumption. Your own inflation can differ from the national average depending on what you spend money on; BLS notes the CPI "does not necessarily measure your own experience with price change."
To compare investment growth after inflation, run the compound interest calculator and then divide by this factor, or use the retirement calculator, which does both. To see whether a raise beat inflation, compare your percent change in pay with the CPI change.
Rule of 72
Divide 72 by the inflation rate for a rough number of years until prices double (and money loses half its purchasing power). At 3% that is about 24 years (exactly 23.4); at 5%, about 14.4 years (exactly 14.2).
Caveats and assumptions
- A constant rate is a simplification; real inflation varies from year to year.
- The CPI tracks an average urban household basket and may not match your personal costs.
- CPI values must come from the same series and base period; mixing CPI-U and CPI-W gives wrong answers.
Frequently asked questions
How much will $100 be worth in 10 years at 3% inflation?
It will buy about what $74.41 buys today. Prices that are $100 now would be about $134.39.
How do I adjust a past price for inflation?
Multiply it by CPI(now) ÷ CPI(then), using CPI-U values from the Bureau of Labor Statistics.
What is the CPI?
The Consumer Price Index is a BLS measure of the average change over time in prices paid by urban consumers for a basket of goods and services.
What is purchasing power?
How much a dollar can buy. As prices rise, the purchasing power of each dollar falls.
Sources
- U.S. Bureau of Labor Statistics — CPI Frequently Asked Questions — what the CPI measures, which index to use, how to read percent changes
- U.S. Bureau of Labor Statistics — CPI Inflation Calculator — official CPI-U based calculator
- Investor.gov (SEC) — Glossary — inflation and real return terms
This calculator gives estimates for planning and education only. It is not financial, tax or investment advice. Your lender, card issuer, employer or tax authority uses its own terms, fees and rounding, so confirm figures with them before deciding. See our disclaimer and how we build and check calculators.