What your inflation result shows
In historical mode there is nothing modelled: the answer is the ratio of two published CPI readings, and the calculator shows you both index levels so you can check the arithmetic yourself. Across the whole published series — 1913 to 2026 — prices rose about 33-fold, an average of 3.2% a year.
The line most calculators leave out is the annual rate — the compound average between your two years. It is what makes different spans comparable: 60% total inflation over eight years and over thirty years are entirely different phenomena, and only the annualised figure says which you are looking at.
Forward mode is separated deliberately, and labelled as a projection. Nobody can source a future CPI, so that number is an assumption you supply. The Federal Reserve targets 2% over the longer run, and actual outcomes have varied widely around it.
How to use this calculator
- Pick a direction. Between two past years uses real data. Forward from today uses a rate you choose.
- Enter the amount and the years. Any pair within the published series works, in either order — the result also states the reverse conversion.
- For the forward projection, set the rate deliberately. Running it at 2%, 3% and 4% shows how much the answer depends on an assumption rather than on data.
Annual figures are averages of the published monthly index, which is the standard way such comparisons are made. The current year is an average of the 6 months published so far, and is flagged in the result rather than presented as a full year.
What the CPI actually measures
The Consumer Price Index tracks the price of a fixed basket of goods and services bought by urban consumers — food, housing, transport, medical care, and the rest — weighted by how much households actually spend on each. The figure used here is the all-items index for all urban consumers, not seasonally adjusted, which is the series the US Bureau of Labor Statistics via FRED itself uses for comparisons across time.
Two consequences follow. Because it is an average across a whole basket and a whole country, your personal inflation rate differs: someone paying rent in a hot market or heavy medical costs has experienced far more than the headline. And because the basket is periodically re-weighted to reflect changing spending, very long comparisons — a century apart — are directional rather than precise. A dollar in 1913 and a dollar today do not buy comparable things.
None of that makes the index unreliable for the job. For questions like "was that salary good in 1995" or "how much has this cost risen in real terms", the CPI is the standard answer and the one every official comparison uses.
Why inflation matters to a saver
Inflation is the reason a savings account paying less than the inflation rate loses money in real terms even though the balance grows. It is the single strongest argument for investing money you will not need for years, and for not holding more cash than your plan requires.
It also reshapes debt in the borrower’s favour. A fixed-rate mortgage is repaid in dollars that are worth progressively less, so inflation quietly erodes the real value of what you owe — one reason a low fixed rate looks better in hindsight after an inflationary stretch.
And it is why long-range planning has to be done in today’s money. A retirement target set in nominal future dollars will be wrong by a factor you can read off this page: the retirement calculator inflates your income target for exactly that reason, and the savings calculator reports what a future balance actually buys.
Reading a historical figure honestly
A conversion across a few decades is straightforward and genuinely useful: it is how you tell whether a 1995 salary was good, whether a price rise beat inflation, or what a grandparent’s house actually cost in comparable terms. Over a century it becomes directional rather than precise, because the basket itself has changed beyond recognition — the 1913 index has no line for air travel, antibiotics or broadband, and a large share of what it did measure has effectively vanished.
Two habits keep the answer defensible. Compare like with like: a wage against a wage, a house price against a house price, rather than a wage in one era against a price in another. And prefer the annualised rate to the headline multiple when the spans differ, because it is the only figure that puts two different periods on the same footing.
What this calculator assumes
- The national CPI-U basket, not your own spending. Housing, healthcare and education have risen faster than the average for long stretches; consumer electronics have fallen.
- Annual averages of the monthly index, so a comparison between two specific months can differ slightly.
- No taxes or interest — this measures purchasing power alone.
- A constant assumed rate in forward mode, which no real economy delivers.
- US prices. Other countries publish their own indices; the Bank of England’s calculator is the equivalent for the UK.
Historical figures are published data. The forward projection is an assumption and should be treated as one.
Inflation questions people ask
Where does this data come from?
The Consumer Price Index for All Urban Consumers, all items, not seasonally adjusted — published monthly by the US Bureau of Labor Statistics. The historical answers are ratios of published index levels, so they are data rather than estimates.
Why is my own inflation rate higher than the official figure?
Because the index averages a national basket. If a large share of your spending goes on categories that have risen faster than average — rent in a tight market, medical care, childcare, education — your experience will exceed the headline number, and legitimately so.
What inflation rate should I use for planning?
Many planners use something in the region of 2 to 3% a year for long-range work, which sits near the Federal Reserve’s longer-run target. The more useful exercise is to run your plan at two rates and see how much the conclusion depends on the assumption.
Does inflation help or hurt me?
Both, in different places. It erodes cash savings and fixed incomes, and it erodes the real value of fixed-rate debt in your favour. Wages that keep pace neutralise much of it; wages that do not are where the squeeze is felt.