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Finance & Business · pattern A, Numeric fields

What money is worth after inflation.

Enter an amount, an inflation rate and a number of years to see the future nominal equivalent and the loss of purchasing power in today's terms.

Inputs

The formula used

future amount = present × (1 + i)ⁿ; real value = nominal ÷ (1 + i)ⁿ

Inflation compounds exactly as interest does. A constant rate is a simplification — real inflation varies year to year and differs by what you buy.

Equivalent future amount

1,806.11

Purchasing power of that amount later
553.68
Purchasing power lost
446.32
Loss as a percentage
44.63 %
Years to halve purchasing power
23.45
Cumulative inflation over the period
80.61 %
Return needed just to break even
3.00 %

3% sounds small and halves money in 23 years.

Because inflation compounds, a modest-sounding rate has severe long-run effects: at 3% a year, purchasing power halves in about 23 years. This is why savings held in cash lose value in real terms even while the balance grows, and why any long financial projection quoted in nominal terms should be treated with suspicion.

Questions about inflation

What is the difference between CPI and RPI?
Different baskets and formulas. RPI includes some housing costs and uses a method that typically produces a higher figure, which is why the choice of index matters in contracts.
Is a nominal return the same as a real return?
No. Real return is roughly nominal minus inflation, and precisely (1 + nominal) ÷ (1 + inflation) − 1.
Why does my own inflation feel higher?
Because the index is an average basket. If your spending is weighted toward rent, energy or food, your personal rate can be well above the headline figure.

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