# Inflation Impact Calculator

> What an amount will buy after years of inflation, and what you would need then to match it. Two questions people ask separately that are the same calculation, seen from opposite ends.

Use it: https://tessalor.com/en/money/inflation-impact

This tool runs entirely in the browser. Nothing entered into it is uploaded.

## Formula

```
Prices rise by a compounding factor:

  prices = (1 + inflation)^years

The two directions, from that one factor:

  what it will buy    = amount / prices
  what you would need = amount x prices

With a return on the money, the first becomes:

  nominal   = amount x (1 + growth)^years
  real      = nominal / prices

which is the same as compounding at:

  real rate = (1 + growth) / (1 + inflation) - 1

Not growth minus inflation. That approximation is
close at small numbers and wrong where it matters.

Years until money halves in value:

  ln(2) / ln(1 + inflation)
```

## Assumptions

- A single constant rate for the whole period. Real inflation is nothing like constant, and any individual decade can sit far away from a long-run average.
- The rate you type is the one that applies to you. A published index is a basket weighted for an average household, and nobody spends like the average — if rent and energy are a large share of your spending, your experienced rate can run above the headline for years.
- The return field is nominal and before tax and charges. Both come off it directly, and both are a real reduction in what the money buys.
- Real growth is computed as the ratio of the two factors rather than the difference of the two rates. The subtraction is the common approximation and it overstates the answer.
- The halving figure is the exact logarithm rather than the rule of 72, which is tuned for the middle of its range and drifts either side of it.
- The figures carry no currency symbol on purpose. The arithmetic is the same in pounds, euros or dollars, and the tool follows whichever currency your locale uses.

## Inputs

| Name | Label | Type | Default | Range |
| --- | --- | --- | --- | --- |
| `amount` | Amount today | currency | 1000 | 0 to 1000000000 |
| `rate` | Inflation | percent | 3 | 0 to 100 |
| `years` | Years | integer | 20 | 1 to 100 |
| `growth` | Return on the money | percent | 0 | 0 to 100 |

## Outputs

- `worthThen` — What it will buy (currency), primary
- `neededThen` — What you would need (currency)
- `lost` — Lost to inflation (currency)
- `halvingYears` — Years to halve in value (number)

## Questions

### What will my money be worth in 20 years?

At 3% a year, an amount held as cash buys about 55% of what it does today after twenty years — 1,000 becomes the equivalent of 553.68. Put the other way, you would need 1,806.11 in twenty years to buy what 1,000 buys now. Both figures come from the same 3% compounding, seen from opposite ends.

### How long until inflation halves the value of money?

At 3%, 23.4 years. At 6%, 11.9. At 12%, 6.1. The rule of 72 — divide 72 by the rate — is a decent approximation and it is tuned for the middle of its range: it says 24 years at 3% against the true 23.4, and 6 years at 12% against 6.1. This tool reports the exact figure.

### Is beating inflation just a matter of earning more than it?

Yes, but not by the margin the subtraction suggests. Real growth is the ratio of the two factors, not the difference of the two rates: 8% against 6% inflation is 1.8868% a year, not 2%. Over thirty years that gap is about a twentieth of the answer — 1,752.01 rather than the 1,811.36 the approximation gives.

### What inflation rate should I assume?

It is a guess and should be treated as one. Many central banks target 2%, long-run realised averages in developed economies have often been closer to 3%, and any given decade can be well outside both. The useful approach is to run the figure you consider pessimistic alongside the one you expect, because over twenty years the gap between them is large.

### Does inflation affect debt the same way?

It works the other way on a fixed-rate debt. The amount owed is fixed in nominal terms, so inflation erodes it in exactly the way it erodes savings — which is to the borrower's benefit. That is not modelled here; this tool looks at an amount of money rather than an obligation.

## Sources

- [Consumer Price Index](https://www.bls.gov/cpi/) — U.S. Bureau of Labor Statistics, applies to 2026. Retrieved 2026-07-31.
- [Price stability and the inflation target](https://www.ecb.europa.eu/mopo/strategy/pricestab/html/index.en.html) — European Central Bank, applies to 2026. Retrieved 2026-07-31.

## Variants

- [What will my money be worth in 20 years?](https://tessalor.com/en/money/inflation-impact/what-will-money-be-worth)

---

Estimate, not advice. See https://tessalor.com/en/disclaimer.
Machine-readable catalogue: https://tessalor.com/api/tools.json