Inflation Calculator

The inflation rate is the year-over-year percentage change in the CPI. When the news says inflation is 3%, that usually means the CPI is 3% higher than it was a year ago. This calculator shows cumulative inflation (the total change from one year to another) and average annual inflation (what the rate averaged to, compounded, over the span). The CPI-U itself (CPI-U, U.S. city average, all items, not seasonally adjusted) is the price index for urban consumers.

The CPI-U measures a fixed market basket of goods and services for the average urban consumer. Your personal inflation depends on what you actually buy — housing, food, medical care, gasoline — which may rise or fall differently than the index, and at a different pace. If you eat out a lot and restaurant prices outpace the overall CPI, your food inflation is higher. If you drive less, gasoline's weight in your personal inflation is lower.

Annual averages from 1913 to 2025, sourced from the U.S. Bureau of Labor Statistics. The data are updated each January after the December CPI release.

No. This calculator uses annual average CPI data only. If you need to convert between specific months, you would need monthly CPI data from the BLS, which publishes both seasonally adjusted and not seasonally adjusted monthly indexes. Annual averages smooth out monthly ups and downs but sacrifice month-level detail.

The BLS CPI-U is the official measure of inflation and is widely used by economists, policymakers, and the federal government. This calculator applies the published formula exactly. However, CPI-U has limitations: it's based on a fixed basket of goods that doesn't change to reflect consumer preferences, and it may not capture quality improvements in new products. Academic economists debate alternative inflation measures (chain-weighted, hedonically adjusted), and some programs use a different index — Social Security's cost-of-living adjustment, for example, is based on the CPI-W (urban wage earners and clerical workers), not the CPI-U.

Purchasing power is how much your money can buy. The purchasing power change shows what happened to a dollar's buying power between two years. If prices rose 25% between the two years, a dollar in the later year buys only 1 ÷ 1.25 = 80% of what it bought in the earlier year — a 20% drop in purchasing power. That's why the purchasing power change is smaller in size than the cumulative inflation over the same span.

Use it to see what an investment return is worth after inflation. If an investment returned 7% last year and inflation was 3%, your real return (the return you can actually spend without losing purchasing power) was about 3.88%. Simply subtracting (7% − 3% = 4%) is a close approximation; the exact figure from the Fisher equation is 3.88%.

The historical U.S. average from 1913 to 2025 is about 3.2% a year. But inflation varies: the 1970s and 1980s saw much higher rates, and the 2010s saw much lower rates. For long-term planning (retirement, college savings), many people use 3% as a middle estimate. For very long periods or specific plans, it's worth running the calculator with a range of assumptions — say 2%, 3%, and 4% — to see how sensitive your plan is to inflation.

The BLS surveys prices for a fixed basket of goods and services every month and calculates an index with 1982–84 = 100 as the base. 'Not seasonally adjusted' means the raw price data aren't adjusted to remove predictable seasonal patterns (like gas prices in summer). The annual average is simply the mean of the 12 monthly indexes. You can also find seasonally adjusted CPI data from the BLS, which removes seasonal swings; the inflation calculator uses not seasonally adjusted so that published annual averages are the straight average of the published monthly figures.

Yes, many employment contracts and vendor agreements include inflation adjustments tied to the CPI. If you have a 2% annual raise and inflation is 3%, your real wage declined. Use the calculator to see what wage or price adjustment you'd need to keep pace with inflation — or to argue for a cost-of-living adjustment. Note that wage and price law sometimes specifies a particular CPI series or month; always check your agreement or local law.