Inflation Calculation Formula:
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The Historic Inflation Calculator UK helps you understand how the purchasing power of money changes over time due to inflation. It converts historical amounts to their equivalent value in today's terms using the Consumer Price Index (CPI).
The calculator uses the inflation adjustment formula:
Where:
Explanation: The formula shows how much you would need today to have the same purchasing power as the original amount in the past.
Details: Adjusting for inflation allows meaningful comparison of economic values across different time periods, helping understand real changes in purchasing power.
Tips: Enter the original amount in pounds, the CPI for the original year, and the current CPI. All values must be positive numbers.
Q1: Where can I find CPI data for the UK?
A: The Office for National Statistics (ONS) publishes historical CPI data on their website.
Q2: What's the difference between CPI and RPI?
A: CPI (Consumer Price Index) is the official measure, while RPI (Retail Price Index) includes housing costs and typically shows higher inflation.
Q3: How often is CPI updated?
A: CPI is updated monthly by the ONS, with historical data going back to 1988.
Q4: Can I use this for very old amounts?
A: For pre-1988 amounts, you may need to use composite indices or different inflation measures.
Q5: Why does inflation matter for financial planning?
A: Inflation erodes purchasing power over time, so long-term financial plans need to account for it.