How the inflation calculator works
This calculator uses the Consumer Price Index for All Urban Consumers (CPI-U) from the U.S. Bureau of Labor Statistics. It compares the average price level in two years to show how much money from one year is worth in another.
For example, if prices doubled between two years, $100 in the first year buys the same as $200 in the second.
Why inflation matters for your money
- Cash in a low-interest account loses buying power when inflation is higher than the interest rate.
- Raises below the inflation rate mean a pay cut in real terms.
- Long-term plans, like the retirement calculator, should account for inflation.
Frequently asked questions
What is CPI?
The Consumer Price Index measures the average change over time in the prices urban consumers pay for a basket of goods and services, such as food, housing, transportation and medical care.
What is a normal inflation rate?
The Federal Reserve targets about 2% inflation per year over the long run. Actual inflation can be much higher or lower in some years.
How can I protect my savings from inflation?
Common options include high-yield savings accounts, Treasury Inflation-Protected Securities (TIPS), I bonds and long-term investing in diversified funds.