About Inflation Calculator
Calculate how inflation affects your purchasing power over time. See what today
How to use
- Enter the dollar amount you want to evaluate — a past price, a salary, a savings target, or any amount you want to understand in today's purchasing power. For example, enter $50,000 to see what a salary from a previous year is worth now.
- Select a starting year and an ending year to define your comparison window. The calculator supports historical periods going back several decades, allowing you to see how inflation has eroded purchasing power over any timeframe.
- Choose an inflation rate: either the historical average for your selected period or a custom rate. The long-term average in both Canada and the US is approximately 2-3% per year, but recent years have seen significantly higher rates (6-8% in 2022).
- Review the adjusted value, which shows what your original amount is worth in the ending year's dollars. A dollar from 2000 has the purchasing power of roughly $1.75 in 2025, meaning prices have increased about 75% over that period.
- Examine the cumulative inflation percentage and year-by-year breakdown. This is especially useful for evaluating salary growth — if your pay increased 2% per year but inflation averaged 3%, your real purchasing power actually declined.
- Use the results to inform retirement planning. If you need $60,000 per year today and plan to retire in 20 years, you will need roughly $108,000 per year at 3% inflation to maintain the same lifestyle.
- Compare different inflation scenarios to stress-test your financial plans. Running projections at 2%, 3%, and 5% inflation shows you the range of possible outcomes.
Frequently asked questions
What is the average inflation rate?
The Bank of Canada and the US Federal Reserve both target 2% annual inflation. Historically, both countries have averaged about 2-3% per year over the last 50 years. However, inflation varies widely — Canada saw rates above 12% in the early 1980s, below 1% during the 2008-2009 recession, and above 8% in mid-2022. Inflation returned closer to the 2-3% target since late 2023. For future planning, using 2.5-3% provides a reasonable middle ground.
How much was $100 worth 20 years ago?
At the average Canadian inflation rate of about 2.5% per year, $100 in 2006 has the purchasing power of approximately $164 in 2026. Something that cost $100 twenty years ago would cost about $164 today. If your salary was $50,000 in 2006 and is $70,000 today, your real raise is only about $7,000 (you would need roughly $82,000 to match purchasing power). This calculator lets you check exact amounts for any year range.
How does inflation affect my savings?
If your savings earn less interest than the inflation rate, your money loses purchasing power every year. At 3% inflation, $100,000 in cash loses about $3,000 in real value per year. After 10 years, your $100,000 has the purchasing power of only about $74,000. This is why keeping large amounts in a low-interest checking account effectively loses money. At minimum, use a high-interest savings account (3-5% in Canada currently). For long-term goals, invest in diversified funds that historically outpace inflation (7-10% return). Use the
Compound Interest Calculator to see how different real return rates compound over your investment horizon.
What is the difference between real and nominal returns?
Nominal return is the raw percentage your investment gains — if your portfolio grew from $10,000 to $10,800, your nominal return is 8%. Real return subtracts inflation to show actual purchasing power increase. If inflation was 3%, your real return is approximately 5%. Always use real returns when evaluating long-term investment performance. A savings account earning 4% during 3% inflation is only growing purchasing power by about 1% per year.
What causes inflation?
Inflation has three main drivers. Demand-pull inflation occurs when consumers want to buy more than the economy can produce, bidding up prices. Cost-push inflation happens when production costs rise (energy, materials, wages) and businesses pass those costs to consumers. Monetary inflation occurs when the money supply grows faster than the economy. The 2021-2023 spike was driven by all three: pandemic stimulus increased money supply, supply chain disruptions raised costs, and pent-up consumer demand surged. Central banks fight inflation by raising interest rates.
How should I adjust my budget for inflation?
Review your budget annually and increase spending estimates by the previous year's inflation rate. Categories that often outpace general inflation include housing (rent in major Canadian cities increased 5-8% annually in recent years), groceries (up 8-10% in 2022-2023), and insurance premiums. If your income does not automatically adjust, negotiate raises that at least match CPI to avoid a real pay cut. A retiree spending $4,000/month today will need about $5,400/month in 10 years at 3% inflation.
What is the Consumer Price Index (CPI)?
The CPI tracks the average price change over time for a fixed basket of about 700 goods and services that Canadian households typically purchase. Statistics Canada measures it monthly across categories including food, shelter, transportation, clothing, health care, and recreation. When media says inflation is 3%, it means the CPI basket costs 3% more than one year ago. The CPI is used to adjust CPP and OAS payments, income tax brackets, and many contracts with inflation escalation clauses. Your personal inflation rate may differ if your spending pattern diverges from the average household.
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