Two ways to read the result
The headline shows what a basket costing your amount today will cost in the future. The second figure inverts it: what today's money will actually be worth in future purchasing power. Both describe the same erosion from opposite directions.
At 6% inflation over 15 years, 100,000 today buys what about 41,700 buys now, while the things that cost 100,000 today will cost about 239,700. Neither number is intuitive, which is exactly why calculating it matters.
Why it changes investment decisions
A deposit paying 6% while inflation runs at 6% has a real return of zero. You have more money and identical buying power. The only return that matters for long-term goals is the real return, which is roughly your nominal return minus inflation.
This is the central argument for holding growth assets over multi-decade horizons. Cash is safe in nominal terms and quietly lossy in real terms.
Frequently asked questions
What inflation rate should I assume?
Long-run averages sit around 2 to 3% in developed economies and 5 to 7% in emerging ones. Education and healthcare typically inflate faster than the headline rate.
What is real return?
Your nominal return adjusted for inflation. Precisely it is (1 + nominal) ÷ (1 + inflation) − 1, though nominal minus inflation is close enough for planning.
Does inflation affect my debt?
Favourably, if the debt is at a fixed rate. Inflation erodes the real value of what you owe, which is why long fixed-rate borrowing can be advantageous in inflationary periods.
Should I use this for retirement planning?
Absolutely. Retirement is the goal most distorted by inflation, because the horizon is long. Always inflate your target expenses before sizing a corpus.
Why does my personal inflation feel higher?
Headline inflation is an average basket. If your spending skews toward categories rising faster than average, such as rent, school fees or medical care, your personal rate is genuinely higher.
Is deflation better?
Not usually. Falling prices tend to accompany weak demand, job losses and rising real debt burdens. Mild positive inflation is what most central banks target.