What is the average inflation rate in the US?

The average inflation rate in the US is about 3% annually.

What causes inflation?

It happens mainly because of supply and demand issues, rising costs, or too much printed money.

Can inflation be good?

Yes, mild inflation shows the economy is growing. But too much inflation is harmful.

Is inflation bad for savers?

Yes. Money kept in savings loses value unless it earns more than inflation.

Is deflation better than inflation?

Not always. Deflation can lead to lower wages and job loss.

Free Inflation Calculator – Adjust Value for Past or Future US Dollars

What is Inflation?

Inflation is when prices go up over time and your money buys less. For example, if something costs $100 today and inflation is 3%, next year it might cost $103. That 3% is inflation.

It affects everything — groceries, rent, gas, healthcare. If your income doesn’t grow at the same rate, you lose purchasing power.

How is Inflation Calculated?

Inflation is usually calculated using a price index like the Consumer Price Index (CPI). Here’s a simple formula:

Inflation Rate = ((CPI in Current Year – CPI in Previous Year) / CPI in Previous Year) × 100

Example: If CPI in 2023 is 260 and CPI in 2022 is 250:

((260 - 250) / 250) x 100 = 4% inflation

Inflation in the US Over Time

Here's a simple chart showing the average inflation rate in the U.S. over the last century.

Types of Inflation

Creeping Inflation: Slow and steady, like 1–3%.
Walking Inflation: Around 3–10%. Noticeable but manageable.
Galloping Inflation: 10–100%. Dangerous.
Hyperinflation: Over 1000%. Rare. Happened in Zimbabwe.
Deflation: Opposite of inflation. Prices drop. Not always good.
Stagflation: High inflation + low growth. Very hard to fix.

Why Does Inflation Happen?

Demand-Pull Inflation: More demand than supply. Prices rise.
Cost-Push Inflation: Production costs increase (e.g., oil, wages).
Supply Chain Issues: Fewer goods → higher prices.
Money Printing: Too much money in circulation lowers its value.

Inflation Calculator Formula

Adjusted Value = Present Value / (1 + Inflation Rate)^Years

Example: $1,000 over 10 years at 3% inflation

Adjusted Value = $1,000 / (1.03)^10 = $744.09

That means in 10 years, your $1,000 will feel like $744 today.

How to Beat Inflation

Invest in Stocks or Mutual Funds – Higher returns than inflation
Real Estate – Property value usually goes up
Avoid Holding Too Much Cash – It loses value every year
Use Retirement Accounts – Like 401(k) or Roth IRA
Review Expenses – Cut unnecessary costs
Look for Inflation-Linked Investments – Like TIPS

Real-Life Scenario

What will $10,000 be worth in 20 years?

If inflation stays at 3%, your $10,000 will be worth about $5,537 in today’s value.

Use our calculator to try with your own numbers and see the effect.

Inflation Calculator