Inflation Calculator

REFERENCE

FAQ

What inflation rate should I use?

For general projections, 3–3.5% reflects the US long-term average. For conservative planning, use 4%. The Fed targets 2%, but actual inflation has historically exceeded this. For recent purchasing power comparisons, 2–3% reflects the post-2024 environment.

How does inflation affect savings?

If your savings account earns less than the inflation rate, your purchasing power is shrinking in real terms even if your balance is growing. A 4.5% HYSA in a 3% inflation environment gives you ~1.5% real return. This is why keeping large amounts in low-interest accounts long-term is costly.

What is the Rule of 72?

Divide 72 by the annual inflation rate to find approximately how many years it takes for prices to double. At 3% inflation, prices double every 24 years. At 6% inflation, every 12 years. The same rule applies to investments — at 7% returns, money doubles every ~10 years.

Why does inflation vary so much?

Inflation is driven by supply and demand dynamics, monetary policy, energy prices, and global supply chains. The 2021–2023 spike was caused by post-pandemic supply chain disruptions, stimulus spending, and energy price shocks. Central banks raise interest rates to slow inflation by reducing borrowing and spending.