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Inflation Impact Calculator

Calculator

See how inflation erodes your purchasing power over time and calculate the real value of your money in the future.

Free to useNo data storedAI insightsUpdated: February 2026

Inflation is the 'silent tax' on your wealth. Even at a modest 3% per year, $100,000 today will only have the purchasing power of about $55,000 in 20 years. If your savings or investments aren't growing faster than inflation, you're actually losing money in real terms. This calculator shows you exactly how inflation impacts your purchasing power over time — and whether your investments are beating it.

Enter Your Details

Enter Your Details

$

The amount of money you want to evaluate

%

Long-term Australian average is ~2.5-3%

How far into the future to calculate

%

Optional: your actual return to compare against inflation

Different categories experience inflation differently

Real-World Examples

Retirement Planning Reality Check

Amy, 35, estimates she needs $60,000/year in retirement at age 67. But that's in today's dollars.

At 3% inflation, $60,000 today = $158,000 in purchasing power terms in 32 years. Amy either needs to save for a $158,000/year lifestyle OR plan that her $60,000 will feel like $23,000 by the time she's 97.

Cash vs Investing

Ben has $200,000 in a savings account earning 4.5%. Inflation is 3%.

Ben's real return is only 1.5% ($3,000/year). After 20 years, his $200,000 in a savings account = $134,000 in real purchasing power. Invested at 8%, it would be worth $329,000 in today's dollars.

Frequently Asked Questions

Glossary

CPI (Consumer Price Index)
The measure used by the ABS to track the average change in prices paid by urban households for a basket of goods and services. It's the main measure of inflation in Australia.
Real Return
Your investment return minus inflation. A 7% return with 3% inflation = 4% real return. Only real returns actually increase your purchasing power.
Purchasing Power
The quantity of goods and services that a given amount of money can buy. Inflation reduces purchasing power over time.

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026

How to Use
  1. Enter the amount of money you want to evaluate.
  2. Set the assumed inflation rate (Australian long-term average is ~2.5-3%).
  3. Choose how many years into the future to project.
  4. Optionally add your investment return to see 'real' (inflation-adjusted) returns.
  5. Select what the money is for — housing and education often inflate faster than CPI.
Key Information
  • The RBA targets inflation of 2-3% per year. Long-term average is around 2.5%.
  • At 3% inflation, prices double approximately every 24 years.
  • Housing costs have historically outpaced CPI, rising 5-7% annually in major cities.
  • Education costs also tend to rise faster than general inflation at 4-5% per year.
Pro Tips
  • Your investments need to earn MORE than inflation to grow in real terms. A 5% savings account at 3% inflation = 2% real return.
  • When planning for retirement, always think in 'today's dollars' — $1M in 30 years might only be worth $400k in today's money.
  • Inflation is why holding large amounts of cash long-term is actually risky — it slowly erodes your purchasing power.
  • Government bonds and Treasury Indexed Bonds (TIBs) offer inflation-linked returns as a hedge.
Avoid These Mistakes
  • Assuming a fixed dollar amount is 'enough' for retirement without adjusting for inflation.
  • Using headline inflation (CPI) for everything — housing, education, and healthcare inflate much faster.
  • Not realising that even 'low' inflation of 2% halves purchasing power in 35 years.
  • Keeping all savings in a bank account earning less than inflation — you're losing money in real terms.
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