Find out how inflation erodes purchasing power over time — or how much you'll need in the future to maintain your lifestyle.
Calculation modeSwitch between historical comparison and future planning.
The value you want to compare across time.
€
Historical base year
2000
198020022025
2026Fixed to today
Fixed to today
2026
202720522076
2026Fixed to today
Average annual inflation assumption
2.5%
0.1%7.5%15%
What Does Inflation Do to Your Money?
Inflation is small in a single year and powerful over a decade. The longer the horizon, the easier it is to underestimate how much future prices can change your plans.
How Inflation Works
Inflation means the same basket of goods costs more over time. Even modest annual inflation compounds, which is why the same €10,000 buys less after 10 or 20 years. This calculator models that erosion with a constant yearly rate.
Use these answers as planning references, not guarantees. Real inflation changes by country, by period, and by the basket of goods that matters most to your household.
Most central banks aim for roughly 2% annual inflation. That level is generally seen as low enough to preserve planning and high enough to avoid deflation. If inflation stays much above 4% for several years, purchasing power usually falls much faster. What feels manageable still depends on wages, borrowing costs, and the wider economy.
Inflation reduces the real value of cash savings over time. If your account earns 1% while inflation is 3%, your purchasing power falls by about 2% per year. Your balance can rise in euros while still buying less. Over long periods, that gap becomes very meaningful.
Inflation is the general rise in prices across the economy. Purchasing power is how much goods and services your money can actually buy. When prices rise faster than your income or investment returns, purchasing power falls. The two ideas are closely linked, but they are not the same thing.
The usual goal is to earn returns above inflation over time. Common tools include diversified stock index funds, inflation-linked bonds, and keeping only short-term cash needs in low-yield accounts. The right mix depends on your time horizon, risk tolerance, and liquidity needs. No strategy removes risk completely, but idle cash is usually the easiest target for inflation.
There is no single global number, but in many advanced economies the average inflation rate over the last 20 years has been around 2% to 3% per year. That long-run average was pushed higher by the sharp inflation surge in 2021 to 2023 after many calmer years. The exact figure changes by country and by the index used. For long-term planning, 2% to 3% is still a practical reference range.
