Inflation Calculator

See how inflation affects your money over time. Calculate future cost and real purchasing power of today's money.

Free to use. Runs in your browser.

Enter an amount, a fixed yearly inflation rate, and a number of years to estimate future cost and purchasing power.

Currency

Amount (£)

Inflation Rate (% per year)

Number of Years

General information only. This calculator and the content below are not financial or investment advice. Results are illustrative estimates based on a fixed user-supplied rate. Inflation rates vary and past figures are not a reliable guide to future performance. Before making any savings, investment, or retirement decisions, consult a qualified independent financial adviser.

Methodology and sources

Formula or method

Applies the compound-interest formula: Future Cost = Present Value × (1 + rate ÷ 100) ^ years. The inverse (real purchasing power) uses: Real Value = Present Value ÷ (1 + rate ÷ 100) ^ years. The user supplies the rate; the tool does not fetch live CPI data.

Basis and assumptions

A single fixed annual inflation rate is applied uniformly across the entire period.
No compounding corrections for mid-year effects; annual compounding only.
UK historical CPI reference figures in the content section are sourced from ONS published data.
The England university tuition figures use the GOV.UK-published fee limits (£9,000 in 2015, £9,535 in 2025/26).

What this tool does not decide

Which savings product or investment is appropriate for your circumstances. Consult a qualified independent financial adviser regulated by the FCA.
Your personal inflation rate, which depends on your own spending pattern and will differ from the CPI headline figure.
Future inflation. The rate you enter is an assumption, not a forecast.

Sources

ONS: Consumer Price Inflation time series (UK CPI, CPIH) (ONS) last accessed 2026-06-10
GOV.UK: Changes to tuition fees – 2025 to 2026 academic year (cap £9,535) (GOV.UK) last accessed 2026-06-10
Bank of England: Monetary Policy and Inflation target (2% CPI) (Bank of England) last accessed 2026-06-17
Federal Reserve: 2025 Statement on Longer-Run Goals (2% PCE target) (Federal Reserve) last accessed 2026-06-17
Bank of Canada: Inflation target (2% midpoint, 1% to 3% band) (Bank of Canada) last accessed 2026-06-17
Reserve Bank of Australia: Australia's inflation target (2% to 3% band, ABS CPI) (Reserve Bank of Australia) last accessed 2026-06-17
European Central Bank: two per cent inflation target (symmetric, HICP) (European Central Bank) last accessed 2026-06-17
UBS Global Investment Returns Yearbook 2025 (Dimson, Marsh, Staunton): 125-year worldwide equities real return 5.2% per year (UBS and London Business School) last accessed 2026-06-17
Moneyfacts Compare: easy-access Cash ISA rates (Moneyfacts) last accessed 2026-06-17

Last checked: 2026-06-17

What Inflation Really Does to Your Money

Inflation is the silent tax on your savings. It doesn't take money from your account, it makes each pound buy less than it did last year. At 3% inflation, £1,000 in your savings account has the buying power of just £744 after 10 years. The number on your statement looks the same, but it buys 25% less stuff.

Think of it like a leak in a boat. A slow leak doesn't sink you today, but ignore it for a decade and you're in trouble. Cash sitting in a current account earning 0% loses real value every single day. Understanding this erosion is useful context when comparing savings products and investment options.

The formula is simple: Future Cost = Today's Cost x (1 + inflation rate) ^ years. It works both ways, you can project what things will cost in the future, or calculate what today's money will feel like in the future.

Inflation Targets Around the World

Most major central banks target low, stable inflation so that households and businesses can plan with confidence. The specific targets and measuring bodies differ by country.

Country / Region	Central Bank	Target	Official Price Measure	Statistics Agency
United Kingdom	Bank of England	2% per year	Consumer Price Index (CPI)	ONS
United States	Federal Reserve	2% over the longer run	Personal Consumption Expenditures (PCE) price index	Bureau of Economic Analysis (PCE); BLS (CPI)
Canada	Bank of Canada	2% midpoint, within a 1% to 3% band	Consumer Price Index (CPI)	Statistics Canada
Australia	Reserve Bank of Australia	2% to 3% per year	Consumer Price Index (CPI)	Australian Bureau of Statistics (ABS)
Eurozone	European Central Bank	2% over the medium term (symmetric)	Harmonised Index of Consumer Prices (HICP)	Eurostat with national statistical offices

What this means for you: Every currency in this calculator is backed by a central bank aiming for roughly 2% annual inflation. Australia uses a band rather than a single point, and the US Federal Reserve formally targets PCE rather than CPI, though both measure broadly the same cost-of-living pressure. Using 2% to 3% as your planning assumption is reasonable across all five currencies.

UK Inflation: A Historical Perspective

Period	Average CPI	£1,000 in 2000 =	Context
2000-2010	2.1%	£1,230	Stable period, BoE target met
2010-2020	2.4%	£1,550	Post-financial crisis recovery
2020-2023	5.8%	£1,840	COVID + energy crisis spike
2023-2026	3.2%	£2,020	Returning toward target

What this means for you: Something that cost £1,000 in 2000 costs about £2,020 today, it's more than doubled. The Bank of England targets 2% per year, but actual inflation often runs higher. Planning around 3% gives you a realistic buffer.

How Inflation Affects Different Parts of Life

Category	10-Year Price Change (UK)	Example
Housing / rent	+40-60%	Average UK rent: £750 (2015) → £1,200 (2025)
Energy bills	+80-120%	Average dual fuel: £1,100 (2020) → £2,000+ (2024 peak)
Groceries	+30-40%	Weekly shop: £60 (2015) → £85 (2025)
University tuition	+6%	England cap: £9,000 (2015) → £9,535 (2025/26, GOV.UK); further rises confirmed for 2026/27–2027/28
Technology	-20-40%	Computing power gets cheaper (deflation in tech)
Childcare	+40-50%	Full-time nursery: £13,000 (2015) → £19,000 (2025)

What this means for you: Overall CPI averages mask huge variation. Housing and energy have inflated far faster than the headline rate. Your personal inflation rate depends on what you actually spend money on. If you rent and have kids, you've felt inflation much harder than headline numbers suggest.

Options That Historically Outpace Inflation

Cash ISAs (short-term)

As of June 2026, leading easy-access Cash ISA rates range from around 4.15% to 4.51% AER (source: Moneyfacts). Some headline rates include a short-term introductory bonus; the underlying variable rate is typically lower. Rates move with the Bank of England base rate, so check Moneyfacts or MoneySavingExpert for the latest figures before choosing a product. Good for emergency funds and money you will need within one to three years, but not a reliable long-term inflation hedge if the Bank of England continues to cut.

Stocks and shares ISA (long-term)

Over the 125 years from 1900 to 2024, worldwide equities delivered a 5.2% annualised real return (above inflation), according to the UBS Global Investment Returns Yearbook 2025 by Dimson, Marsh and Staunton of London Business School and Cambridge. Nominal returns (before adjusting for inflation) have historically been higher, commonly cited in a 7 to 10 percent range, but this varies by country, time period and index. Volatile in the short term, but over ten or more years, broad equity index funds have consistently outpaced inflation in real terms. Past performance is not a reliable guide to future returns.

Workplace pension

Tax relief plus employer match means your money grows 40-100% before any investment returns. The most tax-efficient way to beat inflation for retirement savings.

Index-linked gilts and funds

UK government index-linked gilts and gilt funds (available via investment platforms) pay returns that rise with RPI. NS&I Index-Linked Savings Certificates, which tracked inflation and were tax-free, have not been on sale to new savers since September 2011. Returns from commercial inflation-linked products are subject to income tax above your Personal Savings Allowance, so post-tax real returns can still be negative when inflation is high.

The Rule of 72

Want a quick way to estimate how long it takes for prices to double? Divide 72 by the inflation rate. At 3% inflation, prices double in 72 ÷ 3 = 24 years. At 6%, they double in just 12 years. At 10%, they double in about 7 years.

The same trick works for investments. Money growing at 7% per year doubles in about 10 years. At 4% (a cash ISA), it takes 18 years. This is why the gap between inflation-matching savings and growth investments gets enormous over decades.

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How to use this tool

Enter an amount of money

Select the starting year

Select the target year (defaults to current year)

Common uses

Projecting future costs of goods and services
Understanding how savings lose value over time
Planning retirement income against rising prices
Comparing historical and future purchasing power
Evaluating whether investments beat inflation

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Frequently Asked Questions

How does this calculator work?

It uses the compound formula: Future Value = Present Value x (1 + rate)^years. It shows both what today's money will cost in the future and what today's money will feel like in the future, two sides of the same coin.

What inflation rate should I use?

Major central banks all target roughly 2% annual inflation: the Bank of England (UK), the Federal Reserve (US), the Bank of Canada, the Reserve Bank of Australia and the European Central Bank. Historical averages typically run a little higher, around 3% to 4% in the UK. We default to 3% as a realistic planning assumption across all currencies. Use 2% for optimistic scenarios, 4% to 5% for conservative ones.

Is this accurate for past dates?

This tool projects forward using a fixed rate. For historical calculations with actual year-by-year inflation, use CPI data from the ONS. This is best for future planning, not historical analysis.

What is CPI vs RPI?

CPI (Consumer Price Index) is the official UK inflation measure. RPI (Retail Price Index) includes mortgage interest costs and tends to run 0.5-1% higher. The government uses CPI for benefits and RPI for student loans and some pensions.

How does inflation affect my savings?

If your savings earn 2% interest but inflation is 3%, your money loses 1% of real value per year. After 10 years, £10,000 has the buying power of just £9,044. You need returns above inflation to actually grow wealth.

What causes inflation?

Demand-pull (too much money chasing too few goods), cost-push (rising input costs like energy), and monetary expansion (central banks increasing money supply). The 2022-23 UK spike was mainly cost-push from energy prices and supply chain disruption.

Is 2% inflation actually good?

Central banks target 2% because mild inflation encourages spending and investment. Zero inflation or deflation (falling prices) sounds good but causes economic stagnation, people delay purchases expecting lower prices, businesses cut investment.

How do I protect my savings from inflation?

Cash ISAs help with short-term savings: as of June 2026, leading easy-access Cash ISA rates are around 4.15% to 4.51% AER (source: Moneyfacts), above the current UK CPI rate of about 3.3%. Rates move with the Bank of England base rate, so check Moneyfacts or MoneySavingExpert for the latest. For long-term savings (five or more years), global equity index funds have historically delivered real returns of around 5.2% per year over the 125 years to 2024, with nominal returns often cited in the 7 to 10 percent range (UBS Global Investment Returns Yearbook 2025). Past performance is not a guide to future returns. NS&I Index-Linked Savings Certificates, which tracked inflation and were tax-free, have not been on sale to new savers since September 2011. Pension contributions receive tax relief on top of investment returns.

What is real return vs nominal return?

Nominal return is the headline number (e.g., 7% investment gain). Real return is nominal minus inflation (e.g., 7% - 3% = 4% real return). Real return is what actually matters, it's your increase in purchasing power.

Does inflation affect everyone equally?

No. Your personal inflation rate depends on what you spend money on. Renters feel housing inflation more. Drivers feel fuel inflation. Families feel food and childcare inflation. The CPI basket is an average, not your reality.

How does the Bank of England control inflation?

Primarily through interest rates. Higher rates make borrowing more expensive, reducing spending and slowing price growth. Lower rates do the opposite. Quantitative easing (buying government bonds) is another tool used in extreme situations.

What happens during hyperinflation?

Prices rise so fast that money becomes nearly worthless, think Zimbabwe (2008) or Venezuela (2018) where inflation exceeded 1,000,000% per year. The UK has never experienced hyperinflation; the worst was 24% in 1975.

Results are for general informational purposes only and should be checked before use. They are not professional advice. See our Disclaimer and Terms of Service.