Inflation Impact Calculator — Formula
## How Inflation Erodes Purchasing Power
Inflation increases the cost of goods over time, meaning each dollar buys less in the future.
### Formula
**Future Equivalent = Amount x (1 + Rate)^Years**
**Purchasing Power = Amount / (1 + Rate)^Years**
The purchasing power formula tells you what your current dollars will be worth in real terms.
Inflation increases the cost of goods over time, meaning each dollar buys less in the future.
### Formula
**Future Equivalent = Amount x (1 + Rate)^Years**
**Purchasing Power = Amount / (1 + Rate)^Years**
The purchasing power formula tells you what your current dollars will be worth in real terms.
Esempio Risolto
$1,000 today with 3% annual inflation over 10 years.
- Inflation multiplier = (1 + 0.03)^10 = 1.3439
- To buy what $1,000 buys today, you will need $1,000 x 1.3439 = $1,343.92
- Purchasing power = $1,000 / 1.3439 = $744.09
- Value lost = $1,000 - $744.09 = $255.91