Inflation Calculator

Understanding Inflation & Its Impact on Your Money

Inflation is the gradual increase in prices over time, which erodes the purchasing power of your money. A dollar today buys less than it did a decade ago — and significantly less than 30 years ago. Our Inflation Calculator uses historical US Consumer Price Index (CPI) data to show you exactly how much prices have changed over any time period since 1970.

How Inflation Is Measured

In the US, inflation is primarily measured by the Consumer Price Index (CPI), published monthly by the Bureau of Labor Statistics. It tracks the price changes of a "basket" of goods and services including housing, food, transportation, medical care, and education. In Canada, Statistics Canada publishes a similar CPI. The Federal Reserve targets 2% annual inflation as its long-term goal, while the Bank of Canada also targets 2%.

Historical Inflation Trends

1970s-1980s: The "Great Inflation" era saw rates above 10%, peaking at 13.5% in 1980 due to oil crises and loose monetary policy. 1990s-2010s: The "Great Moderation" brought stable 2-3% inflation. 2021-2023: Post-pandemic inflation surged to 8% in 2022, driven by supply chain disruptions, stimulus spending, and energy prices. 2024-2026: Inflation has moderated back toward the 2.5-3% range as monetary tightening took effect.

Why Inflation Matters for Your Financial Plan

Retirement Planning: If you need $50,000/year in today's dollars, at 3% inflation you'll need $67,000 in 10 years and $90,000 in 20 years. Savings Erosion: Cash sitting in a regular bank account earning 0.1% is losing purchasing power every year. You need at least a high-yield savings account (4-5% APY) to keep pace. Investment Returns: A portfolio returning 10% nominally is only returning ~7% after 3% inflation. Always think in "real" (inflation-adjusted) returns.

Beating Inflation: Stocks historically return 7-10% per year (after inflation: 4-7%). Real estate appreciates 3-5% plus rental income. Treasury Inflation-Protected Securities (TIPS) in the US and Real Return Bonds in Canada adjust automatically for CPI changes. Keeping your emergency fund in high-yield savings or short-term CDs ensures your cash reserves aren't silently shrinking.