Inflation impact
Estimate how inflation affects purchasing power and what an amount today may be worth in real terms over time.
Results
These are estimates based on your inputs.
How this calculator works
Future cost equivalent = amount today multiplied by (1 + inflation rate) to the power of years.
Real return rate uses the Fisher-style adjustment: (1 + nominal growth) divided by (1 + inflation) minus 1.
What this calculator does
This inflation impact calculator estimates how rising prices can erode purchasing power over time.
It also shows how a nominal growth rate compares to inflation in real terms.
How the formula works
We compound inflation over the selected years to estimate the future amount needed to buy the same goods and services. If you enter a growth rate, we adjust it for inflation to estimate real return.
This helps separate headline growth from actual improvement in buying power.
Worked example
Example: £10,000 today, 3% inflation, 10 years. You would need roughly £13,439 in 10 years to match today's purchasing power.
If nominal growth is 5%, the real rate is about 1.94% after inflation.
Common mistakes
- Comparing nominal growth without adjusting for inflation.
- Using short-term inflation spikes as long-term assumptions.
- Ignoring taxes and fees when estimating real returns.
- Assuming one inflation rate fits all spending categories.
When to use this calculator
Use this for long-term savings goals, pension planning, and understanding whether investment growth is beating inflation.
FAQs
Is this based on CPI or RPI?
It uses the rate you enter, so you can model CPI, RPI, or your own assumption.
Can inflation be negative?
This version assumes non-negative inflation input for simplicity.
Does this include tax?
No. Tax and fees may reduce real returns further.