Inflation Calculator
Inflation is the silent tax on cash. £100 today will not buy the same in ten years, and savings that earn less than inflation are quietly shrinking in real terms.
Enter an amount, the inflation rate and a time period to see both sides of the equation.
How the calculation works
We believe numbers should be transparent. Here is the formula behind this calculator.
Worked example
Worked example: £1,000 at 3% for 10 years
Important assumptions
- Assumes a constant annual inflation rate — in reality it swings year to year.
- Uses a simple compound calculation, like interest applied once a year.
- CPI is the common measure, but your personal inflation rate may differ.
Rates & official sources
Every calculation is based on the official rates and rules published by GOV.UK and HMRC.
Frequently asked questions
What is the real return on my savings?
Your real return is your interest rate minus inflation. If you earn 2% while inflation is 3%, your money is losing 1% of its buying power each year.
What is the UK inflation target?
The Bank of England targets 2% CPI inflation. Recent years have exceeded that, so it is worth using a realistic rate rather than 2% when planning.
Why does £100 lose value over time?
Because prices rise, the same money buys less. Compounding means the effect grows — the longer the period, the more of your purchasing power inflation eats.
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View calculatorRelated guides
New to the topic? Read a plain-English guide on savings & investments, with worked examples and tips.
How compound interest works
The eighth wonder of the world, with real numbers.
Read the guide Personal FinanceHow much should I save?
A realistic savings target for your income and goals.
Read the guide Personal FinanceBuilding an emergency fund
Three to six months of costs — and how to get there.
Read the guide TaxCapital Gains Tax explained
How Capital Gains Tax works — the £3,000 allowance, the 18% and 24% rates, and when you pay it.
Read the guide TaxSavings interest tax explained
The Personal Savings Allowance and tax on savings interest — £1,000 for basic-rate, £500 for higher-rate, and what happens above.
Read the guideThese calculations are estimates for guidance only and are not professional financial, tax or legal advice. UK rates and rules change, so always verify important figures with official GOV.UK / HMRC information or speak to a qualified professional. See our full disclaimer.