Inflation & Purchasing Power Decay Calculator
See how inflation raises the future cost of what you buy today, how much purchasing power your cash loses over time, and the yearly raise (COLA) needed to keep up.
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Constant-dollar purchasing power lost to inflation.
Yearly raise needed just to keep your income's buying power flat.
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Erosion Trajectory Curve
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Year-by-Year Purchasing Power & Cost Progression
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| Timeline | Nominal Cash Value | Cumulative Inflation | Equivalent Basket Cost | Real Purchasing Power | Cumulative Real Loss |
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The Silent Tax of Inflation
Inflation steadily reduces what each dollar can buy. Keeping the same number of dollars is not the same as keeping your purchasing power.
Cash earning less than the inflation rate has a negative real return — it loses buying power every year without ever showing a loss on a bank statement.
Building an Inflation-Resistant Portfolio
Some assets have tended to keep pace with rising prices over long periods (none is guaranteed):
- TIPS & Series I savings bonds: TIPS principal is indexed to the CPI-U; I bond rates include an inflation component that resets every six months.
- Dividend-growth companies: businesses with pricing power can pass rising costs on to customers.
- Real estate & REITs: rents and property values have historically tended to rise with local prices over time.
Two ways to think about inflation
This calculator shows two related but different things: the 'future cost' figure tells you what something costing this amount today will likely cost in the future at the given inflation rate. The 'future buying power' figure tells you what today's amount will effectively be worth in the future — how much less it will actually be able to buy.
Both numbers come from the same underlying math, just applied in opposite directions — useful depending on whether you're planning a future expense or evaluating how inflation erodes savings sitting in cash. Switch to the historical mode to see what a past amount is equivalent to today at an average rate you choose.
By Suhaib Hassan · Formula verified 27 Sep 2026 · How CalculatePilot verifies formulas →
Why the inflation rate you choose matters a lot
Small differences in assumed inflation rate compound significantly over long time horizons — the difference between 2% and 4% average annual inflation over 30 years is substantial, roughly doubling the erosion of purchasing power. There's no single 'correct' rate to use, since actual inflation varies year to year; using a long-term historical average (commonly cited around 3% for the US) is a reasonable default for long-range planning. To see how your investment returns stack up against that erosion, check the Compound Interest Calculator.
Frequently asked questions
What inflation rate should I use?
A commonly used long-term historical average is around 3% for the US, though actual inflation varies significantly year to year — use a rate appropriate to your planning horizon and risk tolerance.
Why does cash lose value if I'm not spending it?
Even unspent cash loses purchasing power over time as prices rise — this is why holding large amounts of cash long-term, without any return, means it buys progressively less as years pass.
Related Wealth & Retirement Engines
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