This inflation calculator adjusts the purchasing power of a given amount of money for inflation based on the Consumer Price Index as reported by the Bureau of Labor Statistics (BLS) from 1913 to 2011.
The CPI attempts to measure the changes in costs for all goods and services for an average United States household.
It is not calculated back any further than 1913 because inflation was not a consistent problem until the creation of the Federal Reserve at that time.
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How Does Inflation Affect Savings?
Your money will be worth less in the future due to inflation. In other words, the buying power of your dollars will fall over time.
How much of an effect does inflation have on your savings? How can you counteract the affects of inflation?
The Inflation Calculator can give you some insight into how inflation would have affected an amount of money in the past. Calculate inflation under a variety of scenarios and discover the consequences – without losing any money yourself.
How Inflation Works
Inflation is an increase in the overall price of goods and services in the economy over a period of time.
In the United States, the Bureau of Labor Statistics computes the consumer price index which is used to find inflation rates. The bureau states that the consumer price index “is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.”
The prices of goods and services generally rise with time – inflation occurs – and purchasing power goes down. For example, $100 in 1970 has the same buying power as $579.29 in 2011. $100 could buy more in 1970 than $100 in 2011.
How To Counteract The Affects Of Inflation
The negative affects of inflation are widespread – no investment is safe. However, the affects of inflation on your savings can be counteracted in three main ways:
Never Forget Inflation
The goal of the Inflation Calculator is twofold. First, it helps you understand in real-world terms how historical inflation rates would have affected the purchasing power of an amount of money. Second, it should encourage you to always account for inflation when predicting future value.
Never forget the profound results inflation has on an amount of money. It matters.
Inflation Calculator Terms and Definitions
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