Inflation Calculator Adjust for purchasing power, compare historical prices, and project future costs — with U.S. CPI dat...
Inflation Calculator
Adjust for purchasing power, compare historical prices, and project future costs — with U.S. CPI data and 2025 benchmarks.
CPI-U (Consumer Price Index for All Urban Consumers)** measures the average change over time in prices paid by urban consumers for a market basket of goods and services.
Formula for Adjustment**:
$$ \text{Adjusted Value} = \text{Original} \times \frac{\text{CPI}_{\text{end}}}{\text{CPI}_{\text{start}}} $$
Real Return Formula**:
$$ (1 + r_{\text{real}}) = \frac{1 + r_{\text{nom}}}{1 + \pi} $$ → Approximately: $ r_{\text{real}} \approx r_{\text{nom}} - \pi $
Example** ($10K in 1990 → 2025): CPI 1990 = 130.7, CPI 2025 (est) = 317.5 $10,000 × 317.5 / 130.7 = **$24,300** Avg. inflation = (317.5 / 130.7)1/35 − 1 = **2.58%**/yr
⚠️ Beware of these common mistakes:
- Nominal salary raises** — $60K → $62K = **3.3% raise** but **3.3% inflation** = no real gain
- Retirement planning without inflation** — $50K/yr today = $108K/yr in 25 yrs (3% infl)
- “Stable” prices in volatile sectors** — tuition grew 5.1%/yr, not 3% CPI
- Ignoring compounding** — 3% inflation over 30 yrs = **57% loss** in purchasing power
✅ Pro Tips**:
- Use **TIPS** for inflation-protected investing (principal adjusts with CPI)
- Index COLAs in contracts to **CPI-U** (not “average inflation”)
- Model retirement in **today’s dollars**, then inflate forward
| Year | CPI-U | Annual Inflation |
|---|---|---|
| 2020 | 258.8 | 1.2% |
| 2021 | 271.0 | 4.7% |
| 2022 | 292.7 | 8.0% |
| 2023 | 306.8 | 4.1% |
| 2024 | 316.9 | 3.3% |
| 2025 (est) | 326.4 | 3.0% |
📉 Sector Inflation (2015–2025 Avg)**:
- Housing: 4.2% (rent, owners’ equivalent rent)
- Medical Care: 4.8% (hospital, physician services)
- Education: 5.1% (tuition, fees, textbooks)
- Food: 3.5% (groceries, limited services)
➡️ Historical Inflation
“$10,000 in 1990 — what’s it worth today?” (Answer: $24,300)
➡️ Future Value
“A $250K house today — what will it cost in 20 years?” ($451K at 3% infl)
➡️ Real Return
“7% investment return, 3% inflation — what’s my *real* growth?” (3.88% exact, 4% approx)
➡️ Inflation Rate
“What was inflation between 2020–2025?” (CPI: 258.8 → 326.4 = 4.7% avg/yr)
Note: Uses official BLS CPI-U data (1913–2024) and 2025 CBO forecasts. Medical/education adjustments use BLS subgroup indices.