How this inflation calculator works
This page offers three modes. US CPI mode converts dollars using the Consumer Price Index for All Urban Consumers (CPI-U), not seasonally adjusted, from the St. Louis Fed (FRED) series CPIAUCNS — the same broad index families often mean when they say “CPI.” Forward flat rate grows a dollar amount by a fixed annual rate for a whole number of years. Backward flat rate discounts today’s dollars to an implied past purchasing power at a fixed rate. Flat-rate modes are theoretical; CPI mode matches published index levels for historical comparisons.
What is inflation?
Inflation is a broad rise in the prices of goods and services, which means each dollar buys less. It is usually quoted as the percentage change in a price index over twelve months. Most developed countries aim for low, positive inflation (often near 2%) so policy has room to support employment without letting expectations spiral.
What is the Consumer Price Index (CPI)?
The US CPI tracks average price changes for a market basket of goods and services urban consumers buy. The Bureau of Labor Statistics publishes it monthly. To compare two periods: adjusted amount = dollars × (CPI at end ÷ CPI at start). The YoY table on this page uses the same index to show percent change vs the same month one year earlier.
- Food and beverages
- Housing
- Apparel
- Transportation
- Medical care
- Recreation
- Education and communication
- Other goods and services
Historical US inflation in context
1930s: severe deflation during the Great Depression. 1940s: wartime and post-war price pressure. 1970s–early 1980s: the “Great Inflation,” with double-digit CPI prints and a sharp Fed tightening under Paul Volcker. 1983–2019: the “Great Moderation” — generally lower and less volatile inflation. 2021–2023: a surge from supply shocks, reopening demand, and energy prices, followed by a rapid policy rate increase.
Why inflation occurs
- Demand-pull — spending outruns what the economy can produce at stable prices.
- Cost-push — higher input costs (for example energy or wages) push prices up.
- Built-in / expectations — workers and firms set wages and list prices expecting future inflation.
- Monetary factors — over long horizons, sustained inflation is linked to money and credit growth relative to real output.
Hyperinflation and deflation
Hyperinflation is an extreme breakdown where prices rise so fast that money and contracts lose meaning; it is rare in advanced economies with independent central banks. Deflation (falling prices) can accompany weak demand and debt burdens; policymakers usually try to avoid entrenched deflation because it raises real debt loads and can delay spending.
Inflation and your finances
Cash and fixed nominal claims can lose real value when inflation runs ahead of yields. Stocks, real estate, and inflation-linked bonds (TIPS, I Bonds) are common parts of long-term planning, each with different risks. Moderate inflation also erodes the real burden of fixed nominal debt — a reason mortgage and treasury math often mention “real” vs “nominal” returns.
Retirement and healthcare
Long retirements magnify inflation risk because spending must be funded for decades. Healthcare has often risen faster than the broad CPI, so many plans layer a higher assumed trend for medical costs than for the full basket. Social Security includes cost-of-living adjustments tied to official inflation measures; private pensions may not.
For compound growth with optional inflation context, see the interest calculator; for portfolio projections, the investment calculator.