Inflation & Purchasing Power Calculator 2026
See what your money is really worth over time.
Calculate how inflation erodes purchasing power in United States. See what $1,000 today will cost in the future, or what prices used to be worth in real terms. Uses CPI methodology.
Uses compound inflation. Actual inflation varies year to year. Estimates only.
Compound inflation formula and what it means for your money
Compound formula
Future value = Amount × (1 + rate)^years. At 3% inflation, $1,000 compounds to $1,344 needed in 10 years to maintain the same purchasing power. Inflation compounds — each year's price increase builds on the previous. The Rule of 70: divide 70 by the inflation rate to estimate years until purchasing power halves (e.g. at 3.5%, purchasing power halves in 20 years).
US CPI inflation history
| Period | US CPI rate | Note |
|---|---|---|
| 2024 | ~2.9% | Declining from peak |
| 2022 peak | 9.1% | 40-year high (Jun 2022) |
| 2021 | 7.0% | Post-pandemic surge |
| 2010–2020 | ~1.7% avg | Low inflation decade |
| 1970s peak | ~14% | Oil crisis era |
US CPI inflation history 1970-2025
Using a single decade of inflation to plan a 30-year retirement is a mistake. US inflation has averaged roughly 3% since 1926, but that average hides decades that have been dramatically hotter or colder. The Bureau of Labor Statistics publishes the canonical Consumer Price Index for All Urban Consumers (CPI-U) going back to 1913 at bls.gov/cpi, and The Federal Reserve Bank of St. Louis (FRED) hosts the clean downloadable series.
Decade-by-decade averages (CPI-U, annual)
| Decade | Avg annual CPI | Context |
|---|---|---|
| 1970s | ~7.3% | Two oil shocks, wage-price spiral, stagflation |
| 1980s | ~5.1% | Volcker disinflation; 14.8% peak (Mar 1980) down to 1.1% (Dec 1986) |
| 1990s | ~2.9% | "Great Moderation" begins |
| 2000s | ~2.6% | Housing bubble, 2008 GFC, brief deflation |
| 2010s | ~1.8% | Sub-target; Fed repeatedly undershoots 2% |
| 2020 – 2024 | ~4.3% | COVID supply shock, 9.1% peak (Jun 2022), gradual return to 2-3% |
What a planner should assume
The Fed's explicit long-run target is 2% on the PCE deflator — historically about 0.3% below CPI. Most retirement plans use a 2.5-3% CPI assumption. Social Security's annual Cost-of-Living Adjustment (COLA) is based on CPI-W (urban wage earners) from the third quarter; the 2025 COLA was 2.5%. Fresh CPI releases land on the BLS release calendar, usually the second Tuesday of each month.
Inflation-protected investments in the US
Cash in a checking account loses to CPI every year. Cash in a high-yield savings account keeps pace some of the time but not during surges like 2021-22. Several US instruments are purpose-built to compensate for inflation — each with different limits, tax treatment, and real-world frictions.
TIPS — Treasury Inflation-Protected Securities
TIPS pay a fixed real coupon on a principal that adjusts each month with CPI-U. Issued in 5, 10, and 30-year maturities, auctioned by the Treasury and held via brokerage or TreasuryDirect. Coupon and principal adjustments are federally taxable each year even if not received in cash ("phantom income"), so TIPS are often best held inside an IRA. Recent auctions have cleared with ~2% real yields — the highest in 15 years.
Series I Savings Bonds
I-Bonds combine a fixed rate (set at purchase, currently ~1.2%) with a semi-annual inflation component. Capped at $10,000 per person per year electronically plus up to $5,000 in paper bonds via tax refund. Tax-deferred until redemption, federal-taxable at redemption, exempt from state and local tax; fully tax-free if redeemed for qualifying higher-education expenses (income limits apply). Minimum hold one year; 3-month interest penalty if redeemed within 5 years.
Equities, real estate, commodities
Equities have delivered a long-run real return of roughly 6.5-7% per Jeremy Siegel's Stocks for the Long Run data, but are poor short-term inflation hedges — 2022 showed stocks and bonds both falling as rates rose. US real estate (direct or via REITs) passes rising rents through to income and has historically outpaced CPI by 1-2 points. Broad commodity indices (DBC, GSG) are the most direct hedge but carry roll yield and storage cost drag; gold has kept pace with CPI over multi-decade windows but with very high volatility. A diversified 60/40/TIPS/REIT mix provides the most predictable real-return profile.
Frequently askedFrequently asked questions
What is The Federal Reserve's inflation target?
The Federal Reserve targets 2% average PCE (Personal Consumption Expenditures) inflation over the long run. When inflation runs persistently above or below target, the Fed Chair testifies before Congress (Humphrey-Hawkins testimony) explaining the policy response. US CPI peaked near 9.1% in June 2022 and has since declined toward target.
How does inflation affect savings and investments?
Inflation reduces the real value of cash savings over time — money in a 0% interest account loses purchasing power equal to the inflation rate each year. Investments that outpace inflation (equities, property, index-linked bonds) protect and grow real wealth. The real return on any investment = nominal return minus inflation rate.
Where these figures come from
Savings and investment figures on this page are drawn from The Federal Reserve (rates), the FDIC (deposit insurance), The SEC (investor protection), and The IRS (tax treatment of retirement vehicles).
- Federal funds rate — Federal Reserve — Open Market Operations.
- Interest rate & economic series — FRED — Federal Reserve Economic Data.
- Deposit insurance (up to $250,000) — FDIC — Deposit Insurance.
- Investor education — SEC — Investor.gov.
- IRA & 401(k) contribution limits — IRS — Retirement Plan Contribution Limits.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
Select the question that matches where you are right now.
Your result shows the projected growth or return based on the rate, contribution, and time period you entered — using standard compound or simple interest formulas.
Use this to set savings targets, compare investment options, or understand the impact of starting earlier. Adjust the rate and timeframe to model optimistic and conservative scenarios.
Not a guaranteed return. Actual investment outcomes depend on market conditions, fees, taxes, and timing that cannot be predicted with certainty.
Uses standard financial formulas with the inputs you provided. All calculations run in your browser — no data is sent to any server.
Savings and investment results are dominated by three factors: the rate of return, the time horizon, and regular contributions. Compounding amplifies all three over time.
Returns on returns accelerate growth over time. The difference between 5% and 7% over 20 years is much larger than the 2% gap suggests — compounding is non-linear.
Adding even small regular amounts dramatically increases the final balance. $100/week invested at 7% for 20 years grows to over $110,000 in contributions and $110,000+ in returns.
Starting 5 years earlier often produces a larger final balance than doubling your contribution rate. Time is the most powerful variable in savings calculations.
To improve your savings outcome, focus on starting earlier, increasing contributions, and minimising fees and tax drag on returns.
Starting with a small amount today and increasing over time beats waiting to start with a larger amount. Time in the market matters more than timing the market.
A 1% annual fee on a $100k balance costs $1,000/year and compounds against you. Compare fee structures across savings and investment products.
Super, offset accounts, and tax-free thresholds reduce the drag of tax on your returns — letting more of the growth compound for you.
Savings decisions connect to investment, tax, and retirement planning. Use these calculators to model the broader picture.
Work backwards from a target amount to see how much you need to save each month.
Savings goal →Model how an initial investment grows with regular contributions over different time periods.
Compound interest →See what your future balance is worth in today's dollars after adjusting for inflation.
Inflation calculator →