1. What is the Inflation Calculator?

The Inflation Calculator determines the equivalent purchasing power of an amount from one time period to another using Consumer Price Index (CPI) data. It shows how inflation affects the value of money over time.

2. How Does the Calculator Work?

The calculator uses the inflation formula:

Where:

• Value then — Original amount of money
• CPI then — Consumer Price Index in original year
• CPI now — Consumer Price Index in current year

Explanation: The formula adjusts the original amount by the ratio of price levels between the two time periods.

3. Importance of Inflation Calculation

Details: Understanding inflation's impact helps compare historical prices, evaluate investments, and make informed financial decisions across different time periods.

4. Using the Calculator

Tips: Enter the original amount, CPI for the original year, and CPI for the current year. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Where can I find CPI data?
A: CPI data is typically published by national statistical agencies. For the UK, check the Office for National Statistics; for the US, the Bureau of Labor Statistics.

Q2: How accurate is this calculation?
A: It provides a good estimate for general purchasing power but doesn't account for changes in specific goods or quality improvements.

Q3: Can I use this for any currency?
A: Yes, as long as you have the correct CPI data for that currency's economy.

Q4: Why does money lose value over time?
A: Inflation occurs when prices generally rise due to increased money supply, demand-pull factors, or cost-push factors in the economy.

Q5: What's the difference between CPI and inflation rate?
A: CPI measures price levels, while inflation rate is the percentage change in CPI over time.