Tools
Inflation Calculator
You keep hearing inflation is “back to 2%”. So why does everything still feel more expensive? Because 2% is an average, and averages hide a lot. See exactly what inflation takes from money that just sits still, and why your own rate may be running considerably hotter.
Switches the currency, the price index and the reference episode.
Your real rate
0.00%
—
Statement will say
$0
It will actually buy
$0
Quietly lost
$0
Illustrative arithmetic at a constant rate. Real inflation varies year to year, and your personal rate depends on what you actually buy — rent, energy and food have behaved very differently from the headline index. Excludes tax on interest. Not financial advice.
Averages lie
The “2%” is a blend. Your basket may not be.
Headline inflation is a weighted average of everything a typical household buys. It can read a calm 2% while the things you actually spend on run far hotter. In the 2022 energy shock the gap was brutal:
Euro-area annual inflation, October 2022 — Eurostat (HICP).
And it is personal. Energy is about 9.0% of the average euro-area basket, and food, alcohol and tobacco together about 18.9% (Eurostat HICP item weights, 2026). Food on its own is smaller than that headline figure suggests. But if those categories are a bigger slice of your spending, your personal inflation sits above the published rate every year, and ran far above it in 2022. The number on the news is not your number.
Why cash feels safe and is not
Ask someone whether their savings account is risky and they will say no. Ask them whether they would accept a guaranteed, certain loss of 1.5% of their wealth every single year, and they will say absolutely not.
These are the same question.
The difference is only that one loss is visible, a number on a screen going down, and the other is invisible, expressed as the same number buying steadily less. Human beings are extraordinarily bad at pricing the second kind.
A portfolio that cannot fall is also a portfolio that cannot grow. There is no third option, and pretending otherwise is how a generation of savers ended up poorer while feeling prudent.
What this does not mean
It does not mean cash is bad. An emergency fund belongs in cash precisely because you cannot afford for it to fall 30% in the month you lose your job. Short-dated money, anything you need within two or three years, belongs in cash or short bonds, and inflation drag is the correct price to pay for that certainty.
The mistake is not holding cash. It is holding cash for twenty years and calling it the safe option.
So what actually beats it?
Cash guarantees the loss. Growth is the only exit.
Inflation is a certainty tax on money that sits still. The only thing that has reliably outrun it over long periods is being invested — imperfectly, with ups and downs, but forward.
Questions people actually ask
How much value does money lose to inflation over 20 years?
At a 2% target — the aim of both the Federal Reserve and the ECB — $10,000 held in cash keeps its number but loses roughly a third of its purchasing power over 20 years; it would buy about $6,700 of today’s goods. At 3% the loss is closer to 45%. The balance on the statement never falls, which is precisely what makes the erosion so easy to miss.
What is the real interest rate on my savings account?
Your real rate is roughly your interest rate minus inflation — more precisely, (1 + interest) ÷ (1 + inflation) − 1. If your bank pays 0.5% while inflation runs at 2%, your real rate is about −1.5%: you are losing one and a half percent of purchasing power every year, with perfect certainty, while feeling entirely safe.
Is cash really risk-free?
Cash carries no volatility risk and considerable inflation risk. Those are not the same thing, and confusing them is one of the most expensive mistakes a cautious saver can make. A portfolio that never falls in nominal terms can still lose a third of its real value over two decades. The absence of a visible loss is not the absence of a loss.
What inflation rate should I use?
The ECB targets 2% over the medium term for the euro area, which is a reasonable long-run anchor. But it is a target, not a promise: euro area inflation peaked above 10% in October 2022 (Eurostat). Your personal rate also depends on what you actually buy — rent, energy and food have behaved very differently from the headline index. Model a range, not a point.
Sources — retrieved August 2026
- Euro-area inflation rate: Harmonised Index of Consumer Prices (HICP) — annual rate, incl. the October 2022 peak above 10% — Eurostat, 1997–2026
- Basket weights: HICP item weights — food, alcohol & tobacco 18.9%, energy 9.0%, non-energy goods 25.2%, services 46.8% — Eurostat, 2026
- The 2% target: Price stability — the ECB aims for 2% over the medium term — European Central Bank, strategy review 2021, current
The 2% default is the ECB's aim, not a forecast and not a promise — euro-area inflation has spent long stretches well above and below it. Your personal rate depends on what you actually buy, and no published index measures that.
What this tool is — and what it is not
- Runs in your browser
- Your numbers are never sent anywhere. There is no account, no sign-up and no server doing the maths. Analytics are cookieless and EU-hosted, and your IP address is not stored. The full privacy detail →
- Nothing to sell
- No course, no recommendation, no affiliate links, no ads. If that ever changes, it will say so here before it says so anywhere else.
- Not financial advice
- This is a model, not a personal recommendation. It does not know your tax position, your job security or how well you sleep. A decision this size belongs in a conversation with someone licensed to advise you.
- Who built it
- Philipp Misura — Nearly two decades in the financial industry — first inside the institutions, then advising them. More about Philipp →