Inflation Calculator 2026

Inflation is the rate at which the general price level of goods and services rises over time, eroding purchasing power. The US Federal Reserve targets 2% annual inflation. When inflation is high, each dollar buys fewer goods than it did before.

If your savings account earns 1% interest but inflation is 3%, you are losing 2% of purchasing power each year in real terms. To build wealth, your investments must return more than the inflation rate.

US inflation has averaged approximately 3.0–3.5% per year over the past century. The 1970s saw peaks above 10%. Since 1990, average inflation has been closer to 2.5%. The Fed targets 2% as its long-run goal.

Many financial planners use 2.5-3% as a default long-term inflation assumption for retirement projections, roughly matching the historical US average and the Federal Reserve's 2% target with a buffer. A rate that's too low can understate how much you'll actually need; some planners use a higher rate (3.5-4%) specifically for healthcare costs, since medical inflation has historically outpaced general CPI.

At the historical US average inflation rate of about 3% per year, $1 from 20 years ago would need to grow to roughly $1.80 today to have the same purchasing power — meaning today's dollar buys only about 55% of what it did 20 years ago. The exact figure depends on actual CPI data for the specific years in question rather than an assumed constant rate.

Nominal value is the raw dollar amount without adjusting for inflation — the number printed on a paycheck or price tag. Real value adjusts that amount for inflation to reflect actual purchasing power. A salary that grows 2% a year in nominal terms during a period of 3% inflation is actually shrinking in real terms, even though the dollar figure is rising.

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The arithmetic follows the formula and assumptions documented on this page. The result is still an estimate because actual rates, fees, taxes, timing conventions, eligibility rules, and provider calculations can differ. Use figures from your official quote, statement, contract, or tax form before making a financial decision.

Rate, time, starting balance, recurring payments or contributions, and fees usually have the largest effects. Change one input at a time to create a conservative, expected, and optimistic scenario instead of relying on a single forecast.

Only when they appear as an input or are explicitly described in the methodology. Do not assume an omitted cost is zero. Review the formula and methodology sections to see exactly what is included before comparing the result with an outside quote.

No. A calculator projects the assumptions entered; it cannot predict market returns, inflation, variable interest rates, tax-law changes, or provider decisions. Rerun the calculation with several assumptions to understand the range of possible outcomes.

Professional systems may use daily timing, transaction dates, compounding conventions, rounding rules, account-specific fees, credits, eligibility details, or regulations that a general-purpose calculator cannot know. A small difference can be rounding; a large difference usually means an assumption or included cost is different.