Inflation Calculator
This calculator shows the change in the value of money over time, allowing you to compare purchasing power between two different years based on historical Consumer Price Index (CPI) data.
Purchasing Power
Enter an amount and select two years to see the effect of inflation.
Understanding Inflation and Purchasing Power
Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. In simple terms, your dollar buys you less than it did in the past. This calculator measures this change precisely, using one of the most common metrics: the Consumer Price Index (CPI).
What is the Consumer Price Index (CPI)?
The CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by the Bureau of Labor Statistics (BLS). By tracking the changes in the CPI, we can determine the purchasing power of money at different points in time. This calculator uses annual average CPI data to perform its calculations.
How to Use the Inflation Calculator
This tool can answer many common questions about the historical value of money:
- Salary Comparison: Was a $30,000 salary in 1990 better than a $60,000 salary today? Enter 30000, select start year 1990 and end year to today, and compare the result.
- Real Estate Value: If you bought a house for $50,000 in 1975, what would its value be today based purely on inflation?
- Historical Prices: How much would the $0.05 price of a cup of coffee in 1940 be in today's money?
The "Average Annual Inflation" result is particularly useful, as it shows the smoothed-out yearly rate of inflation required to get from the start value to the end value, similar to a CAGR calculation.