Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks attempt to limit inflation, and avoid deflation, with varying targets of their own. An commonly observed measure of inflation is the inflation rate, the annualized percentage change in a price index—typically the Consumer Price Index (CPI).
The Average Rate of Inflation Calculator helps you determine the average annual inflation rate over a specific period, given the initial and final values of a basket of goods or services. This is particularly useful for understanding the historical purchasing power of money and for economic forecasting.
How it works:
The formula used is derived from the compound annual growth rate (CAGR) formula, adapted for inflation:
Average Inflation Rate = ((Final Value / Initial Value)^(1 / Number of Years)) - 1
This calculation essentially finds the constant annual rate that would cause the initial value to grow to the final value over the given number of years.
Example:
Let's say you bought a basket of groceries for $100 in the year 2018 (Initial Value). By 2023, the same basket of groceries costs $115 (Final Value). This period is 5 years (Number of Years).
Using the calculator:
Initial Value: 100
Final Value: 115
Number of Years: 5
The calculated average annual inflation rate would be approximately 2.84%. This means that, on average, prices increased by 2.84% each year during that 5-year period.
function calculateInflation() {
var initialValue = parseFloat(document.getElementById("initialValue").value);
var finalValue = parseFloat(document.getElementById("finalValue").value);
var years = parseFloat(document.getElementById("years").value);
var resultDiv = document.getElementById("result");
if (isNaN(initialValue) || isNaN(finalValue) || isNaN(years) || initialValue <= 0 || finalValue <= 0 || years <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Formula: ((Final Value / Initial Value)^(1 / Number of Years)) – 1
var averageInflationRate = Math.pow((finalValue / initialValue), (1 / years)) – 1;
// Format as a percentage
var formattedRate = (averageInflationRate * 100).toFixed(2);
resultDiv.innerHTML = "