Inflation Calculator

Inflation steadily erodes the real value of savings. The Federal Reserve targets 2% inflation annually, meaning your savings lose about 2% of purchasing power each year if they earn nothing. US savers can fight this with FDIC-insured high-yield savings accounts (currently 4-5%), TIPS (Treasury Inflation-Protected Securities), I-Bonds (inflation-adjusted US savings bonds), or broad equity index funds which have historically returned 7-10% per year above inflation.

US CPI inflation peaked at 9.1% in June 2022 and has since moderated toward the Federal Reserve target of 2%. The historical average CPI since 1913 is approximately 3.2% per year. Always check the Bureau of Labor Statistics (BLS) at bls.gov for the latest CPI figures, which are released monthly.

Treasury Inflation-Protected Securities (TIPS) are US government bonds whose principal adjusts with CPI inflation. If inflation runs at 3%, your TIPS principal grows by 3% annually, preserving real purchasing power. TIPS pay a fixed real interest rate on the inflation-adjusted principal. They are sold directly at TreasuryDirect.gov or through bond funds and ETFs.

Divide 72 by the annual inflation rate to estimate how many years it takes for prices to double (or your purchasing power to halve). At 3% inflation, prices double in 24 years. At 6% inflation, they double in 12 years. At the Fed target of 2%, prices double in 36 years. This same rule applies to investment returns — money growing at 7% per year doubles in about 10 years.

Inflation is critical for retirement planning because it compounds over decades. At 3% inflation, $50,000 of annual expenses today will require $90,000 in 20 years and $121,000 in 30 years. US Social Security benefits are indexed to CPI with annual Cost of Living Adjustments (COLA). For retirement accounts like 401(k) and IRA, focus on real (after-inflation) returns when projecting your savings.

Inflation erodes the real value of UK savings when savings account rates fall below the inflation rate. The Bank of England targets 2% CPI inflation. UK savers can protect against inflation using Cash ISAs (tax-free interest, currently 4-5%), index-linked gilts (UK government bonds that adjust with RPI/CPI), NS&I Premium Bonds, and equity ISAs for long-term real growth.

UK CPI peaked at 11.1% in October 2022 and has since fallen back toward the Bank of England target of 2%. The Office for National Statistics (ONS) publishes monthly CPI and RPI figures. As of 2025, UK inflation has been running at approximately 2-3%. The Bank of England uses CPI (Consumer Prices Index) as its primary inflation measure, while RPI (Retail Prices Index) is used for index-linked gilts and some pension calculations.

Index-linked gilts are UK government bonds where both the coupon (interest) payments and the final redemption value are adjusted for RPI (Retail Prices Index) inflation. They provide a guaranteed real return, protecting your capital against inflation. They are available directly through the UK Debt Management Office or indirectly through index-linked gilt funds. They are particularly useful for pension funds and long-term inflation-hedging.

The UK new State Pension is protected by the Triple Lock guarantee, which increases it by the highest of: CPI inflation, average earnings growth, or 2.5%. This provides strong real-terms protection over time. In 2025/26, the full new State Pension is £11,502 per year. Private pension income from defined benefit schemes is often indexed to CPI or RPI (capped at 2.5% or 5%), while defined contribution pensions depend on investment performance.

Divide 72 by the annual inflation rate to see how quickly prices double. At the Bank of England target of 2%, prices double in 36 years. At 3% (a more recent average), they double in 24 years. This means that over a 30-year retirement, even moderate 2.5% UK inflation could nearly double the cost of your living expenses, making inflation planning essential for long-term financial security.

Inflation reduces the real value of Australian savings when bank deposit rates fall below the CPI rate. The RBA targets 2-3% CPI inflation. Australian savers can protect purchasing power using high-interest savings accounts (HISA) earning 4-5%, term deposits for rate certainty, or inflation-linked Australian Government Bonds (indexed to CPI) available through the ASX or directly via the Australian Office of Financial Management.

Australian CPI peaked at 7.8% in December 2022 and has since moderated toward the Reserve Bank of Australia (RBA) target band of 2-3%. The Australian Bureau of Statistics (ABS) releases quarterly CPI data. As of 2025, headline CPI has been running at approximately 2.5-3%. The RBA also monitors trimmed mean inflation (which excludes extreme price movements) as a guide to underlying inflation trends.

Superannuation is invested in growth assets over decades, so inflation is a critical consideration. ASIC Moneysmart recommends using a real (after-inflation) return when projecting super balances — typically assumed at 3.5-5% real return per year for a balanced fund. The Association of Superannuation Funds of Australia (ASFA) retirement standard is also updated quarterly for inflation to reflect the cost of a comfortable retirement lifestyle.

Australian indexed bonds (also called Capital Indexed Bonds or CIBs) are government securities where the principal adjusts with CPI each quarter. They pay a fixed real coupon on the inflation-adjusted principal, guaranteeing a real return. They are available through the ASX (with ticker codes like GSIQ) and are suitable for conservative investors seeking inflation protection in their portfolio outside of superannuation.

At the RBA midpoint target of 2.5%, prices double in approximately 29 years (72 divided by 2.5). At 3% inflation (the top of the RBA target band), doubling takes 24 years. For a 30-year retirement, this means living costs could nearly double even within the RBA target range. Australian Age Pension payments are indexed twice yearly (in March and September) to CPI and Male Total Average Weekly Earnings — whichever is higher — providing some inflation protection.

Inflation erodes the real value of Canadian savings when deposit rates fall below the CPI rate. The Bank of Canada targets 2% inflation (within a 1-3% band). Canadian savers can protect purchasing power using TFSA accounts (tax-free growth), HISA accounts (currently 4-5%), GICs (Guaranteed Investment Certificates), and Real Return Bonds (RRBs) — Canadian government bonds linked to CPI. TFSA and RRSP accounts are particularly powerful because tax-free or tax-deferred compounding amplifies real returns.

Canadian CPI peaked at 8.1% in June 2022 and has since fallen back toward the Bank of Canada target of 2%. Statistics Canada releases monthly CPI data. As of 2025, headline CPI has been running at approximately 2-2.5%. The Bank of Canada monitors CPI-Trim and CPI-Median as preferred measures of core inflation, which strip out volatile components to reveal underlying inflation trends.

Real Return Bonds (RRBs) are Government of Canada bonds where both the principal and interest payments are indexed to CPI inflation. They provide a guaranteed real (after-inflation) yield, making them ideal for inflation-sensitive investors such as pension funds and retirees. RRBs are available through bond dealers and can be held in registered accounts (RRSP, TFSA, RRIF). Their price, like all bonds, moves inversely with real interest rates.

Canada Pension Plan (CPP) payments are indexed to CPI inflation and adjusted every January. This provides a reliable, inflation-protected income stream in retirement. The maximum CPP retirement benefit in 2025 is approximately CA$1,364 per month for those who contributed at the maximum level at age 65. Delaying CPP to age 70 increases the benefit by 42% (0.7% per month), providing a larger inflation-protected income for longer-lived retirees.

At the Bank of Canada target of 2%, prices double in 36 years (72 divided by 2). At a slightly higher 2.3% (recent Canadian average), doubling takes about 31 years. For TFSA and RRSP planning, your investment returns must exceed inflation to build real wealth. A balanced portfolio returning 6% nominal with 2% inflation earns a 4% real return — sufficient to double real purchasing power in 18 years according to the Rule of 72.