UK Inflation Calculator: See How Prices Erode Your Money

Quick answer

Inflation is the rate at which money loses buying power. At the Bank of England's 2% target, £100 today buys only about £82.03 worth of goods in 10 years; at 5% inflation it falls to £61.39. The calculator above converts any amount between years using official UK price indices.

Use the inflation calculator

Type your amount into the tool above, set the time period and the average yearly inflation rate, and you will see both the future cash figure and what that money is actually worth in real, like-for-like buying power. Adjust the rate to model an optimistic year or a high-inflation stretch and watch how quickly the gap widens.

How the inflation calculator works

Inflation measures how much the general price of goods and services rises over a year. If inflation is 3%, a basket of shopping that cost £100 last year costs roughly £103 now. Your pound has not changed, but it buys less. An inflation calculator turns that idea into a number you can plan around.

The maths uses compound growth, because each year's price rise stacks on top of the last. The core formula is:

Future price = today's price × (1 + inflation rate)^{number of years}

To work the other way and find buying power, you divide instead:

Real value = future amount ÷ (1 + inflation rate)^{number of years}

So if you want to know what £10,000 sitting in a drawer will be worth in 10 years at 3% average inflation, you calculate £10,000 ÷ (1.03)¹⁰. That comes to £10,000 ÷ 1.3439, which is about £7,441. The cash is still £10,000, but it only buys what £7,441 buys today. You have quietly lost around £2,559 of spending power without touching the money.

The same logic runs in reverse for the past. If something cost £1,000 a decade ago and cumulative inflation since then has been 30%, you would need £1,000 × 1.30 = £1,300 to buy the equivalent today. That is why a wage that looks higher than it did years ago can still leave you worse off.

CPI, RPI and CPIH: which inflation measure to use

The UK does not have one single inflation number. The Office for National Statistics publishes several, and they can differ by a percentage point or more.

• CPI (Consumer Prices Index) is the headline measure the Bank of England targets at 2%. It excludes most housing costs such as mortgage interest and uses a calculation method that tends to produce a slightly lower figure.
• CPIH is CPI plus owner-occupier housing costs and council tax. The ONS treats it as its most comprehensive measure.
• RPI (Retail Prices Index) is the older measure. It includes mortgage interest and council tax and uses a method that usually runs higher than CPI. It is still used for some rail fares, student loan interest and index-linked gilts, even though it is no longer classed as a national statistic.

Because RPI almost always sits above CPI, the index you pick changes the answer. For day-to-day spending power, CPI or CPIH is the realistic choice. If you are checking something contractually linked to RPI, such as an older index-linked product, use RPI. This is a UK inflation calculator, so the rates you enter should come from UK measures rather than overseas figures.

Worked examples with the maths shown

Example 1: cash losing value over five years

Imagine you keep £20,000 in a current account paying no interest, and inflation averages 4% a year for five years. Buying power = £20,000 ÷ (1.04)⁵ = £20,000 ÷ 1.2167 = £16,439. In five years your untouched savings would buy what £16,439 buys now, an erosion of more than £3,500. Leaving money idle is rarely free.

Example 2: a salary standing still

Take a nurse who earned £30,000 three years ago. If cumulative inflation over those three years was 18%, she would need £30,000 × 1.18 = £35,400 today just to stand still. A pay rise to £33,000 sounds like progress, but in real terms it is a pay cut of around £2,400 of buying power. Running the figures stops a headline number fooling you.

Example 3: stacking several years of inflation

Inflation rates vary year to year, so to find the true cumulative effect you multiply each year together rather than adding them. Suppose prices rose 5% one year, then 3.5%, then 2%. A £100 weekly shop becomes £100 × 1.05 × 1.035 × 1.02 = £110.85. Adding the rates would have wrongly suggested 10.5%; compounding gives the accurate 10.85%.

Beating inflation: does your money keep up?

The goal is a real return: growth above inflation. If your savings earn 4.5% while inflation is 3%, your real return is not 1.5%. The precise figure is (1.045 ÷ 1.03) − 1, which is about 1.46%. Only money growing faster than prices is genuinely getting bigger.

A few practical ways UK savers try to outpace inflation:

• Move idle cash into a competitive easy-access or fixed-rate account and check the rate against current inflation with our savings calculator.
• Use tax-free wrappers so inflation-beating returns are not eroded further by tax. An ISA calculator shows how shelter helps, and a savings interest tax calculator reveals what HMRC would otherwise take.
• Let time and compounding work in your favour. Our compound interest calculator shows how reinvested returns can stay ahead of rising prices over the long run.
• For long horizons, model your pot against inflation using the pension calculator so retirement income holds its value.

For an official, regularly updated view of how prices have changed, the Bank of England inflation calculator draws on ONS data back to 1209, and MoneyHelper offers free, impartial guidance on protecting your money.

Things people get wrong about inflation

• Adding rates instead of compounding. Over several years inflation multiplies, it does not add. Adding understates the real total, as Example 3 shows.
• Confusing the cash figure with buying power. A pot that grows in pounds can still shrink in what it buys. Always check the real value, not just the balance.
• Using the wrong index. Quoting RPI when CPI applies (or vice versa) skews the result, because RPI usually runs higher.
• Assuming your personal inflation matches the headline. If a big share of your budget goes on energy, rent or food, your own rate can run well above the national average in some years. Compare against your real outgoings with the cost of living calculator.
• Ignoring inflation in long-term plans. A retirement income that looks comfortable today can fall short decades later once prices have compounded.

How to use the result in a real decision

Once you can see the real number, act on it. If your savings rate is below inflation, your cash is losing ground, so shop around or consider a tax-efficient wrapper. If a pay rise is below cumulative inflation, you have grounds to negotiate or rethink. If you are planning years ahead, build an inflation assumption into the target rather than working in today's pounds and hoping.

Inflation is not always the enemy. Modest, stable inflation around the Bank of England's 2% target is normal in a healthy economy, and borrowers with fixed-rate debt can benefit as the real value of what they owe falls. The point is to plan with eyes open rather than be caught out.

These figures are estimates for guidance only and are not personal tax or financial advice. Inflation rates vary, so check the latest ONS data and consider speaking to a regulated adviser for decisions that matter.

Who should use this calculator

This shows what inflation does to money over time — both what a sum today will be worth in future purchasing power, and how much you would need to keep pace. It is the antidote to looking at a large future number and assuming it means what it would mean today.

The comparison against an investment return is the useful part. If your money grows at 3% while prices rise at 4%, you are getting poorer in real terms despite the balance going up. That is the position cash savings have been in for much of the last two decades, and it is invisible unless you look at it this way.

What this calculator assumes

• Inflation compounds annually at the rate you enter — the Bank of England’s target is 2%, which is offered as a default.
• A single constant rate is applied across the whole period, whereas real inflation varies year to year.
• The growth rate, where entered, is compared against inflation to show the real return.
• Figures are pre-tax.

Limitations — what it does not cover

• Your personal inflation rate. CPI is a national average basket; if your spending is weighted towards energy, rent or childcare, your real rate differs substantially.
• The difference between CPI, CPIH and RPI, which matter because different things — rail fares, student loans, index-linked bonds — use different measures.
• Wage growth, which is what determines whether inflation actually makes you worse off.
• Tax on returns, which reduces the real growth further.
• Deflation and volatile periods, which a single average rate cannot represent.

Related calculators

Carry on planning with the retirement calculator to keep future income ahead of prices, the compound interest calculator to see growth stack up, and the cost of living calculator to compare your real outgoings.

What £100 is worth after inflation

Official UK inflation data comes from the Office for National Statistics. Protect savings from the double hit of inflation and tax with the savings tax calculator and ISA calculator.