UK inflation calculator, 2026/27

How this is calculated

The future cost is calculated by compounding today's amount at the inflation rate you enter for the number of years specified, using the standard compound growth formula. The real value calculation runs the same formula in reverse, showing what a fixed future amount is worth in today's terms if prices rise but the amount itself does not.

Cumulative inflation over the period is simply the compounded rate expressed as a total percentage increase, which is usually a much bigger number than the annual rate might suggest over a longer period, because it compounds.

Why this matters for director pay and pensions

A director who fixes their salary or dividend drawings at a flat amount for several years is effectively taking a real pay cut each year that inflation runs above 0%, even though the number on paper stays the same, which this calculator makes explicit.

The same logic applies to a pension pot or a fixed pension income in retirement; the state pension itself is usually uprated each year, but many private pension annuities and drawdown plans are not, which is worth factoring into long-term retirement planning.

Using this alongside other planning

This calculator is best used alongside a pension or savings projection, since a growth rate that only just outpaces inflation delivers little or no real increase in purchasing power, even though the pot itself is getting bigger in cash terms.

It is also useful when negotiating fixed-term contracts or long leases, where a flat headline figure may be worth considerably less in real terms by the end of the term than at the start.

What inflation rate should I use?

There is no single correct figure; many people use a long-run average of around 2% to 3%, matching the Bank of England's inflation target, though actual inflation has been both higher and lower than this in recent years.

Does this use the actual CPI or RPI rate?

No, you enter your own assumed rate. For the current published CPI or RPI figures, check the latest release from the Office for National Statistics, since these are updated monthly and are not fixed statutory rates.

Why does the effect of inflation seem to accelerate over time?

Because inflation compounds. A 2.5% rise each year does not simply add up to 25% over ten years; it compounds to a larger figure because each year's rise is calculated on an already-inflated base.

How does this relate to my pay rise negotiations?

If your pay rises by less than inflation each year, your real, inflation-adjusted income falls even though the cash amount increases. This calculator helps quantify that gap over a chosen period.