How does the Inflation Calculator work?
Inflation erodes money every year. Formula: Purchasing power = Amount ÷ (1 + rate/100)years. The loss is Amount − Purchasing power – the longer the period, the bigger the effect.
Background & details
How to read your result
The calculator shows you two things: the remaining purchasing power (what today's amount is really worth in the future) and the purchasing power lost (how much value inflation eats away). Important: the cash figure in your account stays the same nominally – it is still €10,000. What shrinks is what you can buy with it. So a result of €7,440 means: in 10 years your €10,000 buys only as much as €7,440 does today.
What values are typical
- 2 % is the stated target of many central banks – about 18 % purchasing power lost over 10 years.
- 3–4 % reflects calmer real-world periods in many developed economies.
- 7 %+ marks genuine high inflation; at 7 % purchasing power roughly halves in about 10 years.
A quick check is the Rule of 72: divide 72 by the inflation rate to get the years until purchasing power halves. At 3 % that is 24 years.
Common mistakes
The classic mistake is treating cash as safe. Money under the mattress or in a zero-interest account is guaranteed to lose real value – inflation is the silent tax on doing nothing. A second mistake: looking only at inflation, not at return. What matters is the real return, meaning interest minus inflation. If your investment earns 5 % and inflation is 3 %, your wealth grows only about 2 % in real terms.
Practical tips
Use the calculator to sanity-check savings goals: if you need the purchasing power of €50,000 in 15 years, inflation means you must save noticeably more. Also compare offers in real terms: a fixed deposit at 2.5 % with 3 % inflation loses real value, even though the number on paper grows. For long-term preservation of value, broadly diversified, higher-return investments are usually unavoidable.
Where the calculator reaches its limits
It assumes a constant rate – real inflation fluctuates year to year. Your personal inflation also differs from the average: if you spend heavily on energy or rent, you feel price jumps in those areas more sharply than the general index suggests.
Inflation and your savings plans
Always build inflation into your long-term goals. A pension of €2,000 a month sounds solid today – but in 25 years at 3 % inflation it equals only about €955 of today's purchasing power. The same applies to pay: a 2 % raise with 3 % inflation is a real-terms cut. So calculate savings goals, pension gaps and salary comparisons in today's purchasing power, not in nominal amounts. That way you make decisions that still hold up in ten or twenty years.