Top 10 best Inflation calculators Online in 2022
In time, the price of goods and services increases. In the end, you’ll require more money to purchase the same product. This is often referred to as inflation. The opposite of inflation is deflation, in which the prices of products and services diminish with time. However, over the past 100 years, the most prevalent phenomenon has been inflation. In the period between the turn of the century 20thcentury until today, the rate of inflation was around 3 to 5% or less.
If you’re interested in how the value of money was at the time or are looking to get an idea of what it will become soon, It’s recommended to try out one of these inflation calculators.
Table of Content
Top 10 Free Inflation Calculators
- Calculator.Net future inflation calculator
- Smartasset inflation calculator
- Bureau of labor statistics inflation calculator
- Nippon India
- US inflation calculator
- CPI inflation calculator
- Calculator soup
- Mint Life
What Is Inflation?
Inflation can be defined as the potential of the prices of services and goods to increase in time. Inflation that is too high suggests an economy is experiencing grave problems. However, negative inflation, also known as deflation, is a more serious issue. Finding inflation that isn’t too hot and not too cold but just right can increase spending by both consumers and businesses and provide a base for economic growth.
The most common form of expression is percentages, which indicate an increase in the year-over-year growth rate. Inflation rates give you an immediate and precise indicator of the ever-changing purchasing power of consumers and companies. The measurement of inflation is of national significance, and maintaining a stable level of inflation is among the main tasks of the Federal Reserve (the other one is to promote fully-fledged employment).
Why Inflation Happens
The fluctuations in prices caused by inflation can happen in any industry and at any point. But, most often, inflation occurs because of an increase in production costs or a rise in demand.
Price fluctuations can be caused by several reasons, like excessive printing of the dollar, and occasionally, the cost of one item will increase while another one will fall.
In general, the various factors which can trigger inflation can be classed into three types:
If there is more demand for items and services than the economy can create.
For example, The consumer wants to purchase milk, but farmers cannot supply enough, which results in the cost of milk increasing.
When the cost of producing products & services increases, the cost of producing them rises, which causes the prices for these products and services to rise.
Example The equipment and components needed to produce milk cost more which caused the price of milk to rise.
The workers anticipate that their wages will rise to meet their expenses for living because costs of goods and services have risen. Therefore, the workers always anticipate prices to increase and demand more pay, which leads to the price of products and services increasing.
Inflation and the CPI
The U.S. Bureau of Labor Statistics (BLS) employs the Consumer Price Index (CPI) to determine inflation. The index is derived from an analysis of 23,000 companies. 2 It tracks the cost of 80,000 items used by consumers every month. 3
The CPI will give you the rate of inflation in general. For example, the BLS chart below utilizes the CPI to determine the rate of inflation from 1990.
CPI is a method that measures inflation, and the two tools go hand-in-hand. They’re not distinct from one another. 4
The Personal Consumption Expenditures price index is also a measure of the rate of inflation. 5 It contains more business-related goods and services than CPI, like health services covered through health insurance. This is because the CPI does not include medical expenses which consumers directly pay.
How to Calculate Inflation Rates
The two most often referenced indexes that determine the U.S. inflation rate are the Consumer Price Index (CPI) and the Personal Consumption Expenditures Price Index (PCE). The two indexes have different methods of the measurement and calculation of inflation.
How to protect yourself from inflation
The most effective method of avoiding inflation is to improve your earnings capacity and income as much as you can increase your earnings and income. A 5% increase in your annual income or a promotion that yields 20 percent more and makes inflation less significant. It’s best to look at different options if that’s not an option or if with an income that is fixed.
One method to safeguard your money is by investing in stocks. It’s a good way to return about 10% of the investment as time passes. 8 But whether it will continue to do as well in the future is unclear; there is the risk when making investments in stocks as well.
Talk to a financial planner prior to making any decisions that could affect your goals overall.
Take a look at two tools you can buy at Treasury of the U.S. Treasury if you’re looking for a better method to safeguard yourself from inflation.
- Treasury Inflated Protection Securities (TIPS): They pay a fixed amount of interest. The government reviews the amount of principal according to fluctuations in the Consumer Price Index, as published by the Bureau of Labor Statistics, every two years. The amount of the bond rises when inflation rises. The interest rate isn’t increased, but the holders are able to receive more cash since the percentage is added to a greater principle. TIPS performs well in times of inflation but is less successful when there is no inflation or stability. They’re not as successful in the long-run when a well-diversified portfolio comprises shares. 9
- Series I Bonds These bonds have a fixed and guaranteed rate of return over the duration of the bonds. They are also impacted by the variable rate, which is tied according to CPI and resets in the months of November and May every year. The yield you receive for this bond will be a mix of its fixed rate as well as the variable rate that is in effect at the time. 10 Go to the Treasury Department’s Savings Bond Calculator to find out the yield of each bond.
If your investments don’t yield greater or equal to inflation results, You’re probably in danger. You’ll have to make difficult choices regarding what you’re able to pay for as inflation saps your purchasing ability. Investors are advised to be aware of inflation and prepare in advance.