| Year | CPI Index | Annual Inflation | Equivalent Value |
|---|
| Scenario | Final Value | Total Inflation |
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What is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. As inflation increases, every dollar you own buys a smaller percentage of goods and services. The most commonly used measure is the Consumer Price Index (CPI), which tracks the average change in prices over time for a basket of goods and services.
About CPI Data
The Consumer Price Index (CPI) is published monthly by the U.S. Bureau of Labor Statistics and measures changes in the price level of a weighted average basket of consumer goods and services. Our calculator uses annual average CPI data from 1913 to present, providing accurate historical inflation calculations based on official government statistics.
Why Calculate Inflation?
Understanding inflation helps you make better financial decisions. It shows the real return on investments, helps plan for retirement needs, demonstrates why saving alone isn't enough, and explains price differences over time. For example, $100 in 1980 had the same purchasing power as approximately $370 today.
Protecting Against Inflation
To protect your wealth from inflation, consider investments that typically outpace inflation: stocks, real estate, Treasury Inflation-Protected Securities (TIPS), and commodities. Keeping money in low-interest savings accounts often results in losing purchasing power over time. The Federal Reserve targets a 2% annual inflation rate for a healthy economy.