US Inflation Calculator

Inflation reduces the buying power of a dollar over time. $100 in 2000 has the buying power of about $185 in 2024, meaning the same goods cost 85% more. The Consumer Price Index (CPI) tracks this with a basket of goods covering housing, food, energy, transportation, healthcare, and miscellaneous services. The official CPI sits around 3.2% annual for 2024, down from the 9% peak in mid-2022.

Inflation does not hit everyone equally. Healthcare and education have inflated 4-5%/year for decades while consumer electronics have actually deflated. Your personal inflation rate depends on your spending mix - a renter facing 8% rent increases experiences much higher inflation than a homeowner with a fixed mortgage.

A 7% nominal return on stocks during 4% inflation is only a 3% real return - you grew your portfolio by 7% but the dollars are worth 4% less. Long-term US stock returns average about 7% real (after inflation), 10% nominal. Treasury bonds average 1-2% real, 4-5% nominal. Cash savings often produce negative real returns - 0.5% interest during 4% inflation loses 3.5% of buying power per year.

Always think in real terms when planning long-term. A retirement target of $1 million in 2024 dollars needs to grow to roughly $1.5 million by 2040 just to maintain purchasing power, before any actual gain. Use the [Compound Interest Calculator](/compound-interest-calculator) with real (inflation-adjusted) return assumptions for honest projections.

The categories that have outpaced general CPI most: healthcare (about 4.7% annual since 2000), education (5%+ for college), childcare (5%), housing in major metros (4-5%). Categories that have lagged: clothing (about 0%), TVs and consumer electronics (deflation), food at home (close to general CPI). The mix of what you spend on determines your felt inflation.

Wages have generally tracked inflation over decades but with major timing gaps. Real (inflation-adjusted) median wages for full-time US workers were roughly flat from 1979 to 2014, then started rising. The 2021-2023 wage gains looked huge nominally but lagged inflation, leaving most workers slightly poorer in real terms.

Treasury Inflation-Protected Securities (TIPS) and Series I savings bonds adjust their principal or interest with CPI, guaranteeing you a real return. TIPS pay a small real coupon (currently 1-2%); I-bonds pay a fixed rate plus an inflation adjustment that resets every 6 months. I-bond limits are $10k/year per person electronically (plus $5k via tax refund).

Stocks are imperfect inflation hedges - they generally outpace inflation over decades but can lag it during specific high-inflation episodes (the 1970s especially). Real estate also generally outpaces inflation through rent growth and property appreciation. Holding cash long-term is the worst inflation strategy for sums beyond 6-12 months of emergency savings.