Inflation is the rate at which the general level of prices for goods and services is rising, and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.

Key Points About Inflation:

• Erosion of Purchasing Power: As inflation increases, every dollar you own buys a smaller percentage of a good or service.
• Impact on Savings: If the inflation rate is higher than the interest rate you earn on your savings, your money loses value over time.
• Investment Considerations: Investors need to consider inflation when making investment decisions, as it can significantly impact real returns.
• Economic Indicator: The inflation rate is a key economic indicator used by policymakers and investors to gauge the health of an economy.

This calculator helps you understand how inflation affects the value of money over time. It's a crucial tool for long-term financial planning, helping you to make informed decisions about savings, investments, and retirement planning.