Inflation Calculator
See how much you'll need in the future to match today's purchasing power — and how inflation silently erodes wealth.
| Total Inflation | 0% |
| Value of $1 Today in Future Dollars | $1.00 |
How Inflation Erodes Purchasing Power
Inflation is the rate at which the general level of prices rises over time. When inflation is 3% per year, something that costs $100 today will cost $103 in a year, $134 in ten years, and $181 in twenty years. Your dollars don't shrink — but what each one buys does.
The Inflation Formula
FV = PV × (1 + rate)^years
This tells you how much money you will need in the future to have the same purchasing power as PV today. The flip side — how much a fixed sum will be worth in today's terms — is PV ÷ (1 + rate)^years, and the purchasing power lost is 1 − 1/(1 + rate)^years.
A worked example
Say you have $100,000 today and want to know what it needs to grow to over 20 years at 3% inflation just to stand still. Using the formula: FV = 100,000 × (1.03)20 = $180,611. That's 80.6% total inflation over the period. Turn it around and the same $100,000, left untouched, would buy only $55,368 worth of today's goods in 20 years — nearly half your purchasing power gone to a rate most people barely notice. Plug your own figures into the calculator above.
Inflation in Australia
The RBA targets CPI inflation of 2–3% over the medium term, and over the past 30 years average Australian inflation has been about 2.5% — which is why 2.5–3% is a reasonable assumption for long-range planning. The recent picture is less settled: inflation peaked near 7.8% in late 2022 (the highest since the early 1990s), fell back through 2023–24, but has proven sticky. As at the May 2026 monthly indicator, headline CPI was running at 4.0% and underlying (trimmed mean) inflation at 3.6% — both still above the target band — and the RBA has held the cash rate at 4.35% in response.
Sources: Australian Bureau of Statistics — Consumer Price Index (monthly indicator), May 2026 · Reserve Bank of Australia — Cash Rate, July 2026
Real vs Nominal Returns
When evaluating investments, the real return (after inflation) matters more than the nominal return. A savings account or term deposit earning 5% with inflation at 4% (the May 2026 headline rate) delivers a real return of only about 1%. Shares have historically delivered 7–9% nominal, or roughly 4–6% real — well ahead of inflation over long periods. Our compound interest calculator shows whether your savings are actually outpacing inflation or just keeping up in name.
What Inflation Does to $10,000
Two views of the same $10,000, from the calculator's formula: what it must grow to just to preserve today's purchasing power, and what it would actually be worth in today's dollars if left as cash. The gap widens fast with both time and the rate.
| Horizon | Must grow to (3%) | Real value (3%) | Must grow to (4%) | Real value (4%) |
|---|---|---|---|---|
| 5 years | $11,593 | $8,626 | $12,167 | $8,219 |
| 10 years | $13,439 | $7,441 | $14,802 | $6,756 |
| 20 years | $18,061 | $5,537 | $21,911 | $4,564 |
| 30 years | $24,273 | $4,120 | $32,434 | $3,083 |
At 3% over 30 years, $10,000 in a drawer keeps barely 40 cents in the dollar of its buying power; at 4% it keeps under 31 cents. That's the case for not holding more cash than you need — and for checking any term deposit or savings rate against the current 4% headline figure before assuming it's getting you ahead.