Skip to content
MasterMath

Salary Inflation Calculator

How much your salary would have to rise to keep the same purchasing power, and how much you have lost if the rise fell short.

Currency and number format for

You should be earning

—

You should be earning—
Cumulative inflation—
Your rise was—
Today's salary, in the old money—
Purchasing power—
Short of breaking even by—

How this was worked out

    The formula

    equivalent salary = old salary × (1 + inflation₁) × (1 + inflation₂) × …

    Where it comes from

    Inflation across several years does not add up, it compounds: two years at 10 % is not 20 % but 21 %, because the second year rises on prices that already rose. That is why a rise that looks as though it covers cumulative inflation often does not.

    How to work it out by hand

    1. Type the inflation rate for each year of the period
    2. Multiply the (1 + inflation) factors for every year
    3. Apply that factor to your old salary
    4. Compare the result with what you earn now

    What is worth knowing

    There is an asymmetry that trips people up: if prices rise 10 %, keeping your purchasing power needs a 10 % rise, but a frozen salary does not lose 10 %, it loses 9.09 %. They are different percentages because they are worked out on different bases. The honest figure to negotiate with is the first one: what the payslip has to rise by. Official inflation data comes from each country's statistics office.

    Frequently asked questions

    Where do I get the inflation figure for each year?

    From your country's statistics office: the ONS in the United Kingdom, the BLS in the United States, Statistics Canada or the ABS in Australia. Use the annual change in the consumer price index.

    Can I put the cumulative figure for the whole period in one field?

    Yes. If you already have the cumulative number, type it on its own and the calculator will not compound anything.

    Why is the loss of purchasing power a smaller percentage than inflation?

    Because the loss is measured against your salary and inflation against prices. With 10 % inflation and a frozen salary, your money buys 9.09 % less.

    Is this any use for asking for a rise?

    It is useful for knowing the floor: below that figure you are earning less than before in real terms. Whatever you ask for above it is a different conversation.