This free online CPI inflation calculator will calculate what a past, present, or future sum of money was or will be worth at another point in time.
The calculator's historical inflation calculations are based on the actual United States Consumer Price Index, which ranges from 1913 to 2016 (updated annually).
Future inflation calculations are based on a combination of the CPI history and your own estimated future inflation rate. The calculator also calculates the average inflation rate for any past period, which will help to make more informed future rate predictions.
Finally, the CPI Calculator also creates a printable, year-by-year report for each of your calculations.
CPI stands for Consumer Price Index, which is an index maintained and reported by the U.S. Bureau of Labor Statistics.
The Consumer Price Index is made up to two primary figures for each reporting period:
For more information about the consumer price index, please visit the official CPI website.
Knowing the past rate of inflation is useful for predicting future inflation. And future predictions are most commonly used in the following ways:
In the case of retirement planning, if you determine you will need $50,000 (in today's dollars) in annual retirement income 20-years from now, and you estimate the average inflation rate will be 2.5%, the effects of inflation will mean you will need to earn $81,930.82 then in order to buy what $50,000 will buy today.
As for adjusting money values, if you were to lend me $1,000 today with the promise that I will pay you back in 10-years, and you anticipate a 2.5% inflation rate, when I pay you back your buying power will have been reduced to $781.20. So to avoid losing buying power on the deal, you would need to insist that I pay you $1,280.08 at the end of the 10-year loan.
Finally, if you are not receiving annual cost of living raises that are equal to or greater than the rate of inflation, your buying power will be decreasing even if your wages are increasing.
While there are many factors that influence the CPI, the predominant factor is the state of the economy.
If the economy is shrinking, consumers have less money to spend, and therefore businesses are forced to reduce their prices to get rid of their excess supply of products. Widespread shrinking prices often causes the CPI to shrink (deflation), as was the case in 2009.
On the other hand, if the economy is growing, consumers have more money to spend, and therefore businesses tend to increase their prices to compensate for the increased demand (build new factories, hire more workers, etc.). Widespread price increases typically causes the CPI to rise (inflation).
Just a quick glance of over the historical Consumer Price Index and you will be able to quickly tell when the economy was shrinking (negative percent change) and when it was growing the fastest (higher positive percent changes).
With that, let's use the CPI Calculator to calculate the effects of inflation or deflation on past, present, or future sums of money.
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Dollar amount for start year: Enter a dollar amount to begin calculating the effects of inflation or deflation on. This amount should coincide with the start year.
Start year: Enter the year that corresponds to the entered start amount. Note that the start year can be a past, present, or future year, but cannot be earlier than 1913.
End year: Enter the year you would like the calculations to stop at. Note that the CPI Calculator will only allow years from 1913 on up, and all calculations beyond 2016 will be forecasted based on your entry on the next line.
Expected future average inflation rate: Enter the average annual rate of inflation you expect will occur for future years. This figure will only be used if the time period involves any years beyond 2016.
Ending worth: This amount is the ending relative buying power of the dollar amount entered, after accounting for inflation from the start year to the end year. If the time period involves years later than 2016, a portion of this result is based on your future inflation rate entry.
Dollar change in CPI: This result represents the dollar amount difference between the starting buying power and the ending buying power. Note that a negative number indicates deflation, which is usually the result of the starting year being later than the ending year.
Percentage change in CPI: This is the total percentage the inflation rate increased or decreased from the start year to the end year.
Average annual rate of inflation: This is the average annual rate of inflation from the start year to the end year.