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Inflation Calculator
Inflation is the constant undercurrent of the economy, slowly eroding the purchasing power of your currency. Our calculator is designed to help you get a better understanding of how inflation has already impacted you and how it will potentially impact you in the future.
See how inflation affects the value of your money over time.
How much would that item cost?
How to Use Our Inflation Calculator
Tracking the real value of your money shouldn't require an economics degree. We’ve designed this tool to be intuitive and fast:
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Enter the Starting Amount: Input the dollar amount you want to track.
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Select the "Somewhere In" Year: This is your base year, representing the point in time when the original price was recorded.
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Select the "Purchased In" Year: Choose the year you want to compare it to.
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Hit Calculate: The tool will instantly show you how much that same item would cost in the target year's currency.
Main Causes of Inflation
Inflation occurs due to a complex interaction between government policy, consumer behavior and corporate neccesity, with four primary drivers that influence it.
Demand-Pull
This is a driving force in times when the aggregate supply is outpaced by aggregate demand, for example when the economy is booming and spending is increased, so factories cannot meet the consumer demand. Whenever such shortages happen, sellers raise prices.
Cost-Push
Unlike demand-pull, cost-push inflation is forced upon the economy by rising production costs. Whenever companies are faced with rising expenses, they can either decide to absorb the cost themselves or pass them to consumers, and it should come as no surprise that most companies choose the lattter
Built-In Inflation
This is the psychological side of inflation, and occuers when the public expects inflation to occur so they start demanding their wages to go up as well. Similarly to how businesses decide to handle these demands in the cost-push inflation, they most commonly raise their prices to pay for the raises, essentially creating a self-fulfilling prophecy.
Breaking this cycle usually requires aggressive intervention from the Federal Reserve, often by raising interest rates to cool the economy.
Monetary Expansion
The last key driver is monetary expansion, which is also often reffered to as monetary inflation, and is easily the most controversial and significant force in long-term inflation.
It is driven by the supply of money, so when the Federal Reserve decides to print more money like we've seen in recent years, the value of each dollar drops with the supply growth.
FAQ
What is the Consumer Price Index (CPI)?
The CPI tracks the average change over time in the prices paid by urban consumers for a market basket of goods and services, including housing, food, and energy.
Is some inflation considered good?
Yes. Most central banks, including the Federal Reserve, target a 2% inflation rate. This encourages people to spend and invest rather than hoard cash, which keeps the economy moving.
How can I beat inflation?
Historically, keeping cash in a standard savings account loses value over time. To grow your wealth, you generally need to move into assets assets like real estate or diversified stock portfolios.