Calculators & Finance

Inflation Calculator

What an amount is worth over time, in either direction.

What it does. Inflation compounds. At 3% a year, money loses half its purchasing power in about 23 years — not 33, which is what dividing 100 by 3 suggests. The rule of 72 gives the right answer: 72 ÷ 3 = 24 years, close enough for planning.

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How to use Inflation Calculator

Enter an amount and a number of years.
Set the inflation rate.
Read the future purchasing power, or work backwards from a past amount.

The rule of 72

Divide 72 by the rate to get the number of years for something to double — or, for inflation, for prices to double and money to halve in value.

At 3%, 24 years. At 6%, 12 years. At 2%, 36 years. It is an approximation and it is accurate enough for any planning decision.

It works in both directions, which is what makes it useful. The same arithmetic that tells you how fast prices double tells you how fast an investment doubles, and comparing the two is the whole question of whether you are getting ahead.

Your inflation is not the headline rate

Published inflation is an average across a basket of goods weighted for a typical household. Your actual rate depends on what you buy.

If a large share of your spending is rent, energy or childcare, your personal inflation in recent years has been well above the headline. If you own your home outright and drive little, it has been below.

That is why the headline figure can feel wrong. It is not wrong; it is an average of a population, and no individual household is the average.

Using it backwards

Adjusting a historical figure into today’s money is where this is most revealing. A £20,000 salary in 2000 is roughly £38,000 in today’s money at long-run UK inflation.

Comparing wages, house prices or costs across decades without doing this produces conclusions that are simply wrong.

One caveat on long back-calculations: the basket itself changes. Comparing a 1975 figure to today assumes people buy comparable things, and they do not — the exercise gets less meaningful the further back it runs.

Frequently asked questions

How fast does money lose half its value?

Divide 72 by the inflation rate. At 3% it takes about 24 years, at 6% about 12. Dividing 100 by the rate gives the wrong answer because inflation compounds.

Why does inflation feel higher than the published rate?

Because the published rate is an average across a basket weighted for a typical household. If rent, energy or childcare is a large share of your spending, your personal rate has been well above it.

What was £20,000 in 2000 worth today?

Roughly £38,000 at long-run UK inflation. Comparing wages or prices across decades without adjusting produces conclusions that are simply wrong.

Is some inflation good?

Most central banks target around 2%, on the view that mild inflation encourages spending and investment while deflation encourages hoarding and can be self-reinforcing. That is the mainstream position rather than a settled fact.

How far back can I usefully calculate?

A few decades. Beyond that the basket itself changes so much that comparing amounts assumes people bought comparable things, which they did not.