Inflation Calculator
See how inflation erodes purchasing power and raises the future amount needed.
Input Data
Results
At a glance:Inflation is a broad, sustained rise in prices that reduces the purchasing power of money. Hong Kong measures it by the Composite Consumer Price Index (CPI) compiled by the Census and Statistics Department. Using compounding, this calculator works out two things: (1) the future amount needed to keep the same purchasing power = present value × (1 + inflation rate)^years; (2) the real purchasing power of a nominal sum in the future = amount ÷ (1 + inflation rate)^years. In short, the higher the inflation and the longer the horizon, the less a given sum can buy later, so savings or investment returns must outpace inflation to truly preserve value.
Formula
Future amount needed = present value × (1 + inflation rate)^years.
Future real purchasing power = amount ÷ (1 + inflation rate)^years.
$$FV = PV \times (1 + i)^{n}$$$$\text{RealValue} = \dfrac{PV}{(1 + i)^{n}}, \quad i = \text{annualInflation}, \; n = \text{years}$$How to Use
- Enter the present value amount.
- Set the annual inflation rate and number of years.
- The future amount needed and real purchasing power are shown instantly.
FAQ
What exactly does inflation mean for my money?
Inflation is the general rise in prices over time, which reduces the purchasing power of money. A dollar today buys more than a dollar of the same nominal amount in future. For example, at an average 3% inflation, HK$100 today will be worth only about HK$74 in 10 years — the same amount of cash simply buys less.
How is the future cost of an item calculated?
Future cost = today's price × (1 + inflation rate)^(number of years). It is compound growth based on the price level. For example, a basket costing HK$10,000 today at 3% average inflation would cost about HK$13,439 in 10 years — the longer the period and the higher the rate, the bigger the gap.
How do I know the real value of my savings?
Take your future nominal amount and discount it at the inflation rate back to today's purchasing power; that is the real value. For example, HK$10,000 deposited for 10 years at 3% inflation has a real value of about HK$7,440 — meaning the actual purchasing power shrinks even without any loss of the principal amount.
Does inflation always reduce the real value of my money?
In most cases yes, when prices keep rising. But if there is deflation (negative inflation), money gains purchasing power over time. Also, if your money earns a return higher than inflation (e.g. a deposit rate above the inflation rate), the real value can still grow.
How can I beat inflation?
The key is to let your money earn a return above the inflation rate — for instance, through time deposits, bonds or other investments with a positive real (inflation-adjusted) return. The longer the horizon, the more the compounding effect helps, but you should also weigh the risk and liquidity of each option.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.