Money
Inflation Calculator
Enter your amount, annual inflation rate, and time period to simulate the erosion of purchasing power. Useful for retirement planning and long-term savings analysis.
| Current Amount |
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|---|---|
| Annual Inflation Rate |
%
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| Years |
yr
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| Year | Real Value | Nominal Needed |
|---|---|---|
| {{ row.year }} | {{ fmt(row.realValue) }} | {{ fmt(row.nominalNeeded) }} |
Real Value of 1,000,000 by Inflation Rate
Real purchasing power of 1,000,000 units after various years and inflation rates.
| Period \ Rate | 1% | 2% | 3% | 5% |
|---|---|---|---|---|
| 1yr | 990,099 | 980,392 | 970,874 | 952,381 |
| 5yr | 951,466 | 905,731 | 862,609 | 783,526 |
| 10yr | 905,287 | 820,348 | 744,094 | 613,913 |
| 20yr | 819,544 | 672,971 | 553,676 | 376,889 |
| 30yr | 741,923 | 552,071 | 411,987 | 231,377 |
Tips
- Central banks typically target an inflation rate of around 2% per year. At this rate, purchasing power halves in about 36 years (Rule of 72: 72 ÷ 2 = 36).
- Rule of 72: divide 72 by the annual inflation rate to estimate how many years it takes for purchasing power to halve. At 3%, that's about 24 years; at 5%, about 14 years.
- When evaluating investments, focus on real returns (nominal return minus inflation). A 5% return with 3% inflation yields only about 2% in real terms.
- Cash and savings accounts preserve nominal value but lose real purchasing power during inflationary periods.
FAQ
Side Note — Hyperinflation and the History of Money
Post-war Japan (1945–1948) experienced hyperinflation exceeding 100–500% annually. What cost ¥100 in 1945 cost over 100 times as much by 1949. The Dodge Line fiscal austerity and Korean War demand eventually brought prices under control.
The opposite problem — deflation — plagued Japan for decades starting in the late 1990s. Falling prices caused consumers to delay purchases, creating a deflationary spiral that stunted economic growth. Both extremes cause significant economic damage when left unchecked.