Cumulative Inflation
Cumulative inflation is the total price increase over a period. It determines how much to discount today’s money when moving backward in time. It is the compound effect of annual inflation rates.
Discount Factor
The discount factor equals 1 / (1 + inflation)^{years}. Multiplying today’s value by this factor provides the historical equivalent. It is the mathematical core of reverse inflation.
Real Purchasing Power
Real purchasing power shows what your current money could buy in the past. It helps compare wages or property affordability across decades, stripping away the "money illusion."
Base Year
The base year is the historical year you are translating values into. Choosing a base near major economic events (like 1991 reforms or 2008 crisis) reveals how inflation reacted to shocks.
Inflation Index (CPI)
An inflation index, often the Consumer Price Index (CPI), tracks price movements of a basket of goods. Accurate historical indices strengthen the reliability of your conversions.
Deflation Period
Deflation periods occur when prices fall. The calculator handles negative inflation by increasing past value instead of reducing it, though this is rare in modern economies.
Salary Normalisation
Salary normalisation adjusts historical wages for inflation, allowing you to compare real earnings across generations. It answers "Did Dad really earn more than me?"
Real Estate Appreciation
Real estate appreciation compares property price growth with inflation to see whether gains are real or merely inflation-driven. Often, "record prices" are just inflation at work.
Historical CAGR
The historical CAGR measures annualised growth adjusted for inflation, giving clarity on investment performance in real terms. It is the true measure of wealth creation.
Cost of Living Adjustment (COLA)
A COLA increases income to match inflation. Understanding COLA values ensures you benchmark salaries or pensions fairly against rising prices.