Final ÷ Initial between your two prices.
Average annual inflation = (Final/Initial)^(1/years) − 1. Cumulative inflation = Final/Initial − 1.Inflation Calculator – See the Real Value of Money Over Time
What this calculator does
This tool compares an initial price and a final price across two years to show the cumulative inflation, the average annual inflation rate (CAGR), and the absolute price change. It’s perfect for budgeting, salary benchmarking, business pricing, and research.
Why this matters
- Purchasing power: See how far your money really goes across years.
- Budgeting & planning: Forecast tuition, rent, or project costs with inflation-aware comparisons.
- Salary checks: Compare past salaries to today’s dollars to see if you’re beating inflation.
- Business pricing: Adjust prices fairly and communicate increases with data.
- Education & research: Build quick, defensible estimates for assignments and reports.
How the math works (simple & transparent)
We use your two prices directly. The ratio Final ÷ Initial equals the total inflation factor for the period. From that, we compute:
- Cumulative inflation:
(Final/Initial) − 1 - Average annual inflation:
(Final/Initial)^(1/years) − 1(this is the compound annual growth rate of prices)
FAQs
Does this use official CPI data automatically?
No. This tool compares two prices you enter and reports the implied inflation. If you plug in CPI values (or CPI indexes) for the two years, it becomes a CPI-based inflation result.
Why is average annual inflation different from the simple average?
We use compounding (CAGR). Prices compound over time, so the compound average is the correct way to annualize multi-year inflation.
Can I use any currency?
Yes—just keep the same currency for both prices. Labels show dollars by default, but the math works for any currency.
Can I compare future prices?
Yes, if you have a forecast for a future price. The calculator will show the implied cumulative and annual inflation between the years.
What if the final price is lower?
The cumulative inflation will be negative, indicating deflation over the period.
Key takeaway
The Inflation Calculator turns raw prices into clear, inflation-aware insights. Use it to budget smarter, negotiate better, and plan with confidence.