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See how inflation can reduce the purchasing power of your money over time. Enter an amount, inflation rate and timeframe to estimate what your money may be worth in the future.

Inflation Impact Calculator

How to Use the Inflation Impact Calculator

Using the calculator takes just a few seconds. Enter your details to see how inflation could affect purchasing power over time.

Step 1 – Enter your amount
Enter the amount of money you want to evaluate. This could be savings, income, a future expense, or any other amount you want to compare over time.

Step 2 – Set the annual inflation rate
Choose the annual inflation rate you want to test. You can try different rates to see how higher or lower inflation could affect purchasing power.

Step 3 – Choose your timeframe
Select how many years into the future you want to estimate. A longer timeframe generally gives inflation more time to affect the purchasing power of your money.

Step 4 – Review your results
The calculator shows three key estimates:

Purchasing Power in Future — what today’s amount may effectively be worth after inflation.
Purchasing Power Lost — the estimated percentage and amount of purchasing power lost.
Future Amount Needed — how much money you may need in the future to match the purchasing power of today’s amount.

You can also switch between the Purchasing Power and Future Amount Needed charts to see how the estimated effect changes over time.

Note: The calculator assumes a constant annual inflation rate. Actual inflation changes over time, so the results are estimates only.

What Is an Inflation Impact Calculator?

An Inflation Impact Calculator estimates how inflation could change the purchasing power of your money over time.

Enter an amount, annual inflation rate, and timeframe to see how much that money may effectively be worth in the future and how much you may need later to match today’s purchasing power.

Inflation means the same amount of money can buy less over time as prices rise. For example, $100 today may not have the same purchasing power 10 or 20 years from now.

This calculator helps make that effect easier to see by showing the estimated loss of purchasing power and the future amount needed to maintain the same value.

It can be useful for planning savings, future expenses, retirement income, or simply understanding how inflation may affect your money over the long term.

Note: Results are estimates based on a constant inflation rate. Actual inflation varies over time.

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What Is the Inflation Impact Calculator Used For?

An Inflation Impact Calculator can help you understand how rising prices may affect your money and purchasing power over time.

Retirement planning — Estimate how much money you may need in the future to maintain purchasing power similar to today. This can help when setting long-term retirement and savings targets.

Future expense planning — See how inflation could affect the future cost of major expenses such as education, travel, housing costs, or everyday living expenses.

Salary planning — Compare your current income with the amount you may need in future years to maintain similar purchasing power if prices continue to rise.

Savings planning — Estimate how inflation could reduce the real purchasing power of money held over long periods. You can then consider whether your savings strategy is keeping pace with your goals.

Fixed income planning — Explore how a fixed pension or other unchanged income amount may buy less over time as the cost of goods and services increases.

Understanding inflation — Use different amounts, inflation rates, and timeframes to see how even relatively small annual price increases can compound over many years.

Tip: Try several inflation rates rather than relying on a single assumption. Actual inflation changes from year to year, so the calculator is best used for comparing different scenarios rather than predicting an exact future value.

Understanding Inflation — Key Concepts Explained

What is inflation?
Inflation is the rate at which the general prices of goods and services increase over time. As prices rise, each dollar generally buys less, reducing the purchasing power of your money.

What causes inflation?
Inflation can result from several factors:

Demand-pull inflation — when demand for goods and services grows faster than the economy's ability to supply them.
Cost-push inflation — when higher costs for wages, energy, materials, transport, or other inputs contribute to higher prices.
Supply disruptions — shortages or disruptions to production and supply chains can push prices higher.
Broader economic conditions — monetary policy, government spending, exchange rates and expectations about future prices can also influence inflation.

What is the Rule of 70?
The Rule of 70 is a quick way to estimate how long it could take prices to roughly double at a constant inflation rate. Divide 70 by the annual inflation rate. For example, at 3.5% inflation:

70 ÷ 3.5 = approximately 20 years

This means prices could roughly double over 20 years if inflation remained at 3.5%, substantially reducing the purchasing power of a fixed amount of money.

What is hyperinflation?
Hyperinflation refers to an exceptionally rapid and sustained increase in prices. It can cause the purchasing power of money to decline very quickly and is far more extreme than the inflation experienced under normal economic conditions.

How is inflation measured in Australia?
In Australia, inflation is commonly measured using the Consumer Price Index (CPI). The CPI tracks changes in the prices of a representative basket of goods and services purchased by Australian households.

Changes in the CPI provide an indication of how the overall cost of living is changing, although your personal experience of inflation may differ depending on what you spend your money on.

Why does inflation matter for your money?
Even relatively low inflation can have a significant effect over long periods. When planning for savings, retirement or future expenses, considering inflation can give you a more realistic picture of how much money you may need in the future.

Frequently Asked Questions

1. What is an Inflation Impact Calculator?
An Inflation Impact Calculator estimates how inflation may reduce the purchasing power of money over time. It can also estimate how much money you may need in the future to maintain similar purchasing power to today.

2. How does inflation affect the value of my money?
As prices rise, the same amount of money generally buys fewer goods and services. For example, if prices increase over several years, $100 in the future may have less purchasing power than $100 today.

3. How is purchasing power calculated?
The calculator uses your starting amount, assumed annual inflation rate and timeframe to estimate how the real purchasing power of that amount could change over time.

4. What inflation rate should I use?
There is no single rate that will accurately predict future inflation. You can try several scenarios, such as 2%, 3%, 4% or higher, to see how different inflation assumptions affect your results.

5. What is the difference between future amount needed and purchasing power?
Purchasing power shows what your current amount may effectively be worth after inflation. Future amount needed estimates how much money you may require in the future to have purchasing power similar to the amount you have today.

6. Can I use this calculator for retirement planning?
Yes. It can help you understand how inflation may affect future living expenses and retirement income. However, it does not account for every factor involved in retirement planning, such as investment returns, taxes, fees or changes in spending.

7. Does the calculator predict future inflation?
No. The calculator uses the inflation rate you enter as an assumption. Actual inflation can rise or fall from year to year, so the results should be treated as estimates rather than predictions.

8. How is inflation measured in Australia?
Inflation in Australia is commonly measured using the Consumer Price Index (CPI), which tracks changes in the prices of a representative basket of goods and services purchased by households. Your personal inflation rate may differ depending on how you spend your money.

Tips to Help Protect Your Purchasing Power Against Inflation

Inflation can gradually reduce what your money can buy. While there is no guaranteed way to completely avoid its effects, there are several strategies that may help over the long term:

Review the interest rate on your savings — Compare the rate you earn with current inflation. If your savings consistently earn less than inflation, their purchasing power may decline over time.
Consider long-term investing — Diversified investments such as shares or broad-market funds may provide opportunities for long-term growth. Returns are not guaranteed, and investments can rise or fall in value.
Keep an emergency fund accessible — Not all of your money needs to chase higher returns. Keeping readily available savings can help cover unexpected expenses without having to sell investments.
Increase savings as your income grows — When you receive a pay rise, consider directing part of the increase toward savings, investments or retirement goals.
Review your budget as prices change — Rising costs can gradually affect groceries, utilities, housing and other expenses. Regularly reviewing your budget can help you identify where your money is going.
Plan future goals using inflation — A savings target that seems sufficient today may not be enough 10 or 20 years from now. Include an inflation assumption when planning for retirement, education or other long-term expenses.
Diversify where appropriate — Holding different types of investments may help reduce reliance on the performance of a single asset or market. The right approach depends on your goals, timeframe and tolerance for risk.

Remember: Inflation is only one factor to consider when making financial decisions. Investment returns, fees, taxes, risk and your personal circumstances can also affect your results.

Real-Life Scenarios — How Inflation Affects Everyday Money

Inflation can affect much more than the price of groceries. Over many years, it can change the real value of your income, savings and future financial goals.

Scenario 1 — A Retiree With a Fixed Income

Margaret has recently retired and receives $3,000 per month. Her income comfortably covers her regular expenses today.

But imagine her income remains fixed while prices increase by an average of 3% per year.

After 10 years, $3,000 would have purchasing power equivalent to roughly $2,230 today. After 20 years, it would be worth only around $1,660 in today's purchasing power.

What this means: A retirement income that seems comfortable today may not provide the same lifestyle decades from now. Inflation is an important part of long-term retirement planning.

Scenario 2 — A Young Saver

James has $20,000 in savings and plans to use the money toward a future home deposit.

If his savings grow more slowly than inflation, the balance may increase while its real purchasing power declines.

For example, if his savings earn 1% while inflation averages 3%, his money is effectively losing purchasing power over time.

What this means: The number in your bank account isn't the only thing that matters. It's also important to consider whether your money is keeping pace with rising prices.

Scenario 3 — A Small Business Owner

Sarah owns a small bakery. A loaf of bread costs her $4.00 to produce, and she sells it for $5.50, leaving a $1.50 margin before other expenses.

Over time, ingredients, electricity, wages and other costs increase. If Sarah keeps charging the same price, her margin can gradually shrink.

What this means: Inflation doesn't only affect households. Businesses may also need to regularly review costs, prices and profit margins.

Scenario 4 — A Parent Saving for Education

David wants to start saving for his child's future education.

He estimates the cost based on today's prices, but his child won't need the money for another 18 years.

If education costs rise over that period, the amount David originally planned to save may no longer be enough.

What this means: For long-term goals, consider how much the goal itself could cost in the future rather than relying only on today's price.

Scenario 5 — A Salary That Stays the Same

Alex earns $55,000 per year. Imagine his salary remains unchanged for several years while everyday prices continue rising.

He still sees $55,000 on his payslip, but groceries, housing, transport and other expenses cost more. His salary therefore buys less than it used to.

What this means: A salary doesn't necessarily need to decrease for your purchasing power to fall. If your income grows more slowly than inflation, your real income can decline.

The Bigger Picture

Inflation often happens gradually, which makes its long-term effect easy to overlook. Your bank balance, salary or retirement income may stay the same while the amount it can actually buy changes significantly.

Use the Inflation Impact Calculator above to test different amounts, inflation rates and time periods to see how inflation could affect your own money.