How to use the Inflation Calculator
- 1 Choose “Future price” or “Purchasing power”.
- 2 Enter an amount, the average yearly inflation and the number of years.
- 3 Read the result and the year-by-year overview.
What is inflation?
Inflation is the general rise in prices over time. When prices go up, the same amount of money buys less: its purchasing power falls. Central banks such as the European Central Bank aim for inflation of about 2% a year over the medium term.
Two ways to look at it
- Future price: at 2% inflation, something that costs €1,000 today will cost about €1,219 in 10 years.
- Purchasing power: in 10 years, €1,000 will buy as much as about €820 does today – almost 18% less.
Small percentages add up
Inflation compounds, just like interest. At 2% a year prices double in about 35 years; at 3.5% they double in only 20 years. A quick estimate is the rule of 70: divide 70 by the inflation rate to get the number of years until prices double.
Protecting your money
Savings that earn less interest than inflation lose real value. Compare your savings rate with inflation, and for long-term goals such as retirement, consider how inflation affects the amount you will need.
Note
The calculator assumes a constant inflation rate. Real inflation varies from year to year and differs between products – energy and food prices, for example, can move much faster than the average.
Frequently asked questions
How do you calculate the effect of inflation?
Future price = amount × (1 + inflation)^years. Purchasing power = amount ÷ (1 + inflation)^years.
What inflation rate should I use?
For long-term estimates many people use 2%, the ECB’s target. For recent years or specific products, use the actual figures published by your national statistics office.
Can inflation be negative?
Yes, that is called deflation: prices fall and money buys more. You can enter a negative rate in the calculator.
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