Inflation Calculator

Inflation is caused by demand-pull factors (too much money chasing too few goods), cost-push factors (rising production costs), and monetary factors (excessive money supply growth). Central banks manage inflation primarily through interest rate policy.

If your savings account earns 1% interest but inflation is 3%, you are effectively losing 2% of purchasing power per year. This is the real interest rate (nominal rate minus inflation). Investments need to outpace inflation to preserve wealth.

Hyperinflation is extreme inflation exceeding 50% per month. Historical examples include Weimar Germany in the 1920s and Zimbabwe in the 2000s, where prices doubled daily. It is caused by excessive money printing, typically in response to government debt crises.