Inflation Calculator
Calculate the future cost of goods or the future value of money based on an average annual inflation rate.
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The Time Value of Money and Inflation
**Inflation** is the general increase in the prices of goods and services in an economy over time, resulting in a fall in the purchasing power of money. The **Inflation Calculator** uses a basic compounding formula to project how much an item will cost in the future, assuming a constant inflation rate.
The Future Value (FV) Formula:
The formula used is equivalent to the compound interest formula, where inflation acts as the growth rate: $$ FV = PV \times (1 + i)^n $$ Where:
- $PV$ is the **Present Value** (Initial Cost/Amount).
- $i$ is the **Annual Inflation Rate** (as a decimal).
- $n$ is the **Number of Years** ($\text{End Year} - \text{Start Year}$).