At any steady rate, prices multiply by (1 + rate) each year and purchasing power divides by the same factor. The rule of 72 applies to inflation too: divide 72 by the rate and that is roughly how many years it takes for the cost of living to double.
The same math in two directions
A $1,000 expense at 3% inflation costs $1,344 in ten years — the top figure. The same $1,000 held in cash buys what $744 buys today — the purchasing-power row. Both are the identical compounding, once applied forward to prices and once backward to money. Seeing both prevents the common mistake of accounting for inflation twice.
The halving time uses the rule of 72 with the inflation rate: at 3%, living costs double roughly every 24 years and purchasing power halves on the same schedule. At 6%, the schedule compresses to twelve years, which is why stretches of high inflation reorder household finances so fast.
The formula
Future cost = amount × (1 + rate)^years. Purchasing power = amount ÷ (1 + rate)^years. Halving time = ln(2) ÷ ln(1 + rate), which the rule of 72 approximates as 72 ÷ (rate × 100). The calculator shows the exact figure; the rule is the mental version worth carrying.
Using it on real decisions
Retirement planning is the biggest use: a budget of $4,000 a month today is not the target, because the target is that budget multiplied by (1 + inflation)^years until retirement. The second use is judging savings rates: subtract inflation from any advertised rate to get the real return, and only the real return buys tomorrow's prices.
The rate field accepts any number, so historical episodes can be tested: the US long-run average sits near 3%, but the 1970s ran far higher for a decade. Planning at the average while your decade runs at the 1970s rate is how retirement plans fail quietly.
Frequently asked questions
What inflation rate should I use?
For long horizons the US average of about 3% is the standard assumption. For near-term planning, the most recent CPI reading matters more — but a plan should not rest on a single year's rate, which is why the long-run average anchors the default.
Why do future cost and purchasing power differ?
They are the same loss seen from opposite ends: future cost is what the expense becomes, purchasing power is what the cash becomes. Adding them or averaging them would double-count — read each against its own baseline.
Does this account for taxes?
No — inflation itself is not taxed. But interest earned while beating inflation is, which is why a 4.5% CD in a 25% tax bracket nets about 3.4% before inflation: barely at the historical average. Real, after-tax return is the figure to plan with.