# Inflation Calculator

This calculator shows the inflation rate of everyday products you buy, as well as recurring expenses such as rent or insurance, and other services you use. Optionally, see if your salary is keeping pace with inflated prices.

Current (or more recent) price

Original Price - before current price
(Optional)

(Optional) To see if salary inflated at same rate

Defines time period if salary entered

## Entry Fields - Inflation Calculator

Product/Item Name - Optional; used when displaying the calculations.

Current Price - Enter the newer price of the product or service. If calculating a product's inflation for a past period, use this field to enter the more recent product price.

Previous Price - Enter the price previously paid for the product or service.

Salary - Optional; To calculate if your salary has kept up with inflation at the same rate as the product or service increase. For example, if you are calculating for rent, which increased by 18%, the inflation calculator will show what your salary would be if it was inflated at the same rate. Note that this calculation is only done if the price change indicates inflation, and is ignored if the product's current price has decreased.

You can use this calculator to determine price changes of everyday items, from food and beverages to clothing purchases, as well as items such as rent and utilities.

If calculating for expenses like rent and you want to compare that to your salary to see if it's keeping pace with the increases, make sure to keep the time period aligned for both the item and your salary. For example, if calculating rent increase per month, enter your monthly salary; if calculating per year, enter your annual salary.

Salary Time Period - This field is only required if you provide a Salary, and indicates if the time period for the salary value you entered; For example, is the salary you entered per hour, per year.

## How is the inflation rate of a product calculated?

The inflation rate formula is :

((CP - PP)/PP) * 100

Subtract the previous price from the more current price, which indicates the change in price. If it's positive, the product's price has increased; if negative, the price decreased. Then divide by the previous price and multiply by 100, yielding the percent change.

where:

• CP = Current Price (or more recent price)

• PP = Previous Price (prior to CP)

## What is Inflation?

Inflation quantifies how much prices are increasing, which simultaneously signifies the decrease in your money's purchasing power. This means that when product prices increase, you can buy less of them with your money.

### Candy Inflation

Let's take a look at Candy in terms of how its price increase over time diminish the buying power of a dollar. From 1925 until 1969, a candy bar cost 5 cents! If you had a dollar, you could buy 20 bars of candy. Fast forward to 1970 to 1974, when candy increased to 10 cents. With that same dollar, you could now buy 10 bars of candy. From 1969 to 1970, the price of a candy bar doubled (100% inflation) and the buying power of one USD dollar (\$1 USD) was reduced by 50% since you could only buy half as many candy bars.

### Measuring Inflation - Consumer Price Index

The Consumer Price Index (CPI), measured in the U.S. by the Bureau of Labor Statistics (BLS) , is a gauge of inflation. CPI measures the average price changes over time for a basket of goods and services; That basket is comprised of the following categories:

• Food and Beverages
• Housing
• Apparel
• Transportation
• Medical Care
• Recreation
• Education and Communication
• Other Goods and Services

Unlike the CPI, our inflation calculator enables you to zoom into price changes for a specific product or service you use. The calculator does not average, so you can see exactly how much an item has changed in both amount and percentagewise. This is helpful since many times price changes do not follow averages; In the inflations of 2022-2023, many products have risen 50 to 100 percent, and more.

## US Inflation 2022-2023

The inflation that hit the US in 2022, peaking at just over 9%, was, and continues into 2023, to be a shock to the wallet. For many, this is the first time having to choose between daily necessities, as well as cutting back on non-essential goods. A trip to the supermarket or home improvement store can certainly be daunting, when each visits costs more than the previous.

And what's somewhat confounding is that even though the Federal Reserve has raised the Fed Funds rate 11 times between March 2022 and July 2023 (more at Forbes.com), which has brought inflation down to 3.1% as of November 2023, prices on many items are still rising.

Do a little research online, and you'll find a host of reasons postulated for this, including that companies keep raising prices because they can - that we consumers are acclimated to higher prices, so what's a few more cents here or there, as if we will not notice. Many of us notice and are equally appalled at how package size is decreasing while prices are increasing, so that we are paying more for less.

## Higher US Inflation - 1940s, 1970s

While inflation in the 2020s is certainly disconcerting, there have been several other periods in US history that had higher inflation, including:

• In 1946 and 1947, after World War II ended, inflation soared, peaking at close to 20%.
• From 1973 to 1981 - for 9 long years, inflation ranged from almost 7 percent to a little over 13 percent.