Inflation Rate
Future value of money vs. inflation.
- An inflation with rising prices will decrease the value of money over time
- A deflation - the opposite of inflation or negative inflation - with decreasing prices will increase the value of money over time
Inflation Rate
The future value of money after periods with uniform inflation rates can be expressed as
F = P (1 - i)n (1)
where
F = future value
P = present value
i = average inflation (or deflation) rate per period (positive for inflation, negative for deflation)
n = number of periods
Example - Inflation and Future Value
The future value of an amount of 100 after 10 periods and 4% of inflation rate can be calculated as
F = 100 (1 - 0.04)10 =
= 66.5
Future Value of Present Money due to Inflation Rate - Calculator Table
This calculated table visualizes the decrease in future value of present money due to inflation rate and time.
Present Value of Money
Start Year
End Year
Max. Inflation Rate (%)
Download and print Inflation chart - Future Value vs. Present Value and Inflation Rate
Variable Inflation Rate
The future value of money after periods with variable inflation rates can be calculated as
F = P (1 - i1) (1 - i2) ...... (1 - in) (2)
where
i1..n = inflation rates of terms
The average inflation rate for all periods can be calculated as
(1 - ia)n = (1 - i1) (1 - i2) ...... (1 - in) (3)
or
ia = 1 - [(1 - i1) (1 - i2) ...... (1 - in)]1/n (3b)
where
ia = average inflation rate
