Finance & Money
Inflation & Real Return Calculator
Inflation quietly reduces what each pound can buy. A sum that feels comfortable today may cover less in ten or twenty years — and an investment return only helps if it outpaces price rises after costs and tax.
This free calculator projects the future cost of today’s basket of goods, the purchasing power of idle cash, and the real (inflation-adjusted) value of a simple compounded return. Useful for long-term budgeting and savings “what ifs”.
Figures are illustrative. UK CPI/CPIH change over time; enter the Bank of England’s 2% target, a recent average, or a stress-test rate. Not a forecast and not investment advice.
Interactive tool
Illustrative compound inflation · not an ONS forecast
e.g. 2 for Bank of England target, or your scenario
Optional — use 0 for cash under the mattress
Inflation impact
Investment vs inflation
Illustrative only. Ignores tax, fees, variable rates and changing inflation. Not investment advice — past or assumed returns are not a guarantee of future results.
How to use this tool
- Enter an amount in today’s pounds.
- Choose an assumed annual inflation rate and the number of years.
- Optionally enter an investment or savings return rate (use 0 for cash).
- Compare future basket cost, cash purchasing power and real investment value.
- Copy the summary when comparing scenarios.
Nominal vs real returns
A nominal return is the percentage growth before inflation. A real return is what is left after prices rise — roughly (1 + nominal) ÷ (1 + inflation) − 1. If your savings earn 3% while inflation is 3%, your real return is about zero before tax.
Cash under the mattress has a negative real return whenever inflation is positive. Even a current account with low interest can lose purchasing power in real terms.
UK inflation in everyday planning
The Bank of England’s inflation target is 2% (CPI). Actual rates have been higher or lower in different years. Long-term planners often use a modest assumption and test a higher “what if” rate. This tool compounds at a constant rate for simplicity.