WealthInflation Calculator 2026 (Canada)
Purchasing power calculator
Future price: how much you will need in X years for the same purchasing power as today.
Show year-by-year table
For illustration only, computed at a constant inflation rate. Real-world inflation varies each year. No personalized advice.
How inflation works
Inflation is the general, continuous rise in prices. When we say "inflation is 2%," it means that, on average, a household's basket of goods and services costs 2% more than a year earlier. Your $100 bill has not shrunk, but what it can buy has. Compounded over decades, that erosion becomes massive: at 3% per year, prices roughly double in about 24 years, and your purchasing power is cut in half over the same span.
The calculator applies the compounding of inflation, exactly like compound interest, but in reverse for purchasing power:
Future price = Amount · (1 + i)^Z and Real value = Amount / (1 + i)^Z
where Amount is the starting sum, i the annual inflation rate, and Z the number of years. The purchasing power loss in percent equals 1 − 1 / (1 + i)^Z: that is the share of your dollar's value that has evaporated. If you pick a year range, we simply use Z = end year − start year with the rate you entered (no official historical data is built in).
Worked example
Take $10,000 today, 2.1% inflation per year (the Bank of Canada's target), over 25 years. To buy in 2051 what $10,000 buys in 2026, you would need about $16,800: that is the "future price." Seen the other way, those same $10,000 left earning nothing would be worth only about $5,950 in today's purchasing power — a loss of roughly 40%. And with a more cautious 3% per year, close to Canada's long-run historical average, the loss climbs to nearly 52% over 25 years. That is exactly why letting large sums sit at 0% quietly costs you.
Why staying invested protects your purchasing power
The only way to neutralize inflation is a positive real return: your investments' nominal return minus inflation. Money at 0% loses every year, no exceptions. A diversified investment aims for a return above inflation, so your capital does not merely track prices, it outpaces them. For example, a 5% nominal return with 2% inflation leaves roughly 3% real gain per year. Nothing is guaranteed, markets fall in some years, and this is not personalized buy or sell advice — but over long horizons, staying invested remains the main defense against monetary erosion. To compare gross growth with real growth, pair this page with the compound interest calculator.
Frequently Asked Questions
What exactly is inflation?
Inflation is the general rise in prices across the economy over time. In practice, the same $100 bill buys a little less each year: the money itself does not change, but what it can buy shrinks. Inflation is measured by tracking the price of a representative basket of goods and services for a typical Canadian household. Inflation of 2% per year means that, on average, this basket costs 2% more than a year ago.
How does the CPI measure inflation in Canada?
Statistics Canada publishes the Consumer Price Index (CPI) every month, tracking the cost of a fixed basket of roughly 700 goods and services: housing, groceries, transport, clothing, health care, recreation, and more. The 12-month change in the CPI is the most quoted annual inflation rate. The Bank of Canada aims to keep inflation around 2%, the midpoint of a 1% to 3% target range. This calculator uses a constant annual rate that you choose: that is a simplification, since real-world inflation varies from year to year.
Why does investing beat inflation over the long run?
Money sitting in a 0% account loses purchasing power every year, at the rate of inflation. A diversified investment (stocks, index ETFs) aims for a return above inflation: it is the real return, meaning the nominal return minus inflation, that grows your purchasing power. For example, a 5% nominal return with 2% inflation leaves roughly 3% real gain. Nothing is guaranteed and markets fall in some years, but over long horizons, staying invested is the main defense against monetary erosion. For illustration only, no personalized advice.
What inflation rate should I use for a long projection?
For long-term planning, many people use the Bank of Canada's 2% target. However, over very long historical periods, Canadian inflation has often averaged around 3% per year, with much higher decades (the 1970s-1980s) and calmer ones. Testing 2%, 3%, and a more pessimistic 4% scenario gives a realistic range rather than one falsely precise number. These are estimates for illustration only.
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