What inflation rate should I use?

The U.S. historical average is about 3% per year over the past century, though the 2010s averaged closer to 2% and 2021–2023 averaged above 5%. Use a conservative 3% for long-term planning and adjust for current conditions when projecting short-term costs.

How does this relate to investment returns?

Your real return is the nominal return minus inflation. A 7% investment return during a 3% inflation year produces a 4% real return. Inflation calculators help you check whether your savings are actually growing in purchasing power.

Inflation Calculator

Inflation reduces what a dollar can buy over time. This calculator shows how much a given amount of money in one year is equivalent to in another year, using a constant annual inflation rate. It is useful for comparing historical prices, projecting future costs, or understanding the real return on an investment.

How this calculator works

Future Value = Present Value × (1 + Inflation Rate)^Years. To find the past equivalent: Past Value = Future Value / (1 + Inflation Rate)^Years. The U.S. long-run average CPI inflation rate is roughly 3% per year, though it varies significantly by decade. You can enter any rate to model different scenarios.

Formula reference: BLS: CPI Inflation Calculator methodology

Example

Example: $10,000 today at 3% average annual inflation will have the purchasing power of roughly $13,439 in 10 years — meaning you would need $13,439 in year 10 to buy what $10,000 buys today.

Frequently asked questions

What inflation rate should I use?: The U.S. historical average is about 3% per year over the past century, though the 2010s averaged closer to 2% and 2021–2023 averaged above 5%. Use a conservative 3% for long-term planning and adjust for current conditions when projecting short-term costs.
How does this relate to investment returns?: Your real return is the nominal return minus inflation. A 7% investment return during a 3% inflation year produces a 4% real return. Inflation calculators help you check whether your savings are actually growing in purchasing power.

This calculator provides estimates for general informational purposes only and does not constitute financial, tax, or legal advice. Always confirm important numbers with a qualified professional or your lender/institution before making a decision.