For most purposes, the U.S. Retail Price Inflation (Annual Average) data set and the U.S. Wage Inflation data set are sufficient. Special-purpose data sets include U.S. Retail Price Inflation (December to December); U.S. Medical Cost Inflation; and U.S. Retail Price Inflation (ShadowStats). For information about these data sets, scroll down this page to the section "Changing Data and Formatting Options."

See more instructions and examples below. For a question-and-answer format of basically the same information, see Tom's Inflation Calculator Frequently Asked Questions.

Example #1 (price inflation, backward in time): Suppose you just paid $2.00 for a gallon of regular gasoline. Somebody tells you that gasoline cost only 50 cents a gallon in 1975. But was gasoline really cheaper back then, after allowing for inflation?

• To find out, make sure the following data set is selected: U.S. Retail Price Inflation (Annual Average). The currently selected data set is indicated below the row of Inflation Calculator buttons. You can change it by clicking the Options button. By default, the Inflation Calculator automatically starts with U.S. Retail Price Inflation (Annual Average).

• Enter 2.00 in the Dollar Amount field.

• Enter 2009 (the default) in the Starting Year field.

• Enter 1975 in the Target Year field.

• Click on the Calculate button.

Example #2 (wage inflation, forward in time): Let's say you were making $25,000 a year in 1999. Have your wages kept pace with everyone else's wages over the last ten years?

• To find out, first make sure to choose the correct data set: U.S. Wage Inflation. (If necessary, click the Options button to choose this data set in the Inflation Calc Options window.)

• Enter 25,000 in the Dollar Amount field.

• Enter 1999 in the Starting Year field.

• Enter 2009 (the default) in the Target Year field.

• Click the Calculate button.

• U.S. Retail Price Inflation (Annual Average), 1666 to 2070
  
• U.S. Wage Inflation, 1914 to 2008
  
• U.S. Medical Cost Inflation, 1936 to 2008
  
• U.S. Retail Price Inflation (December to December), 1914 to 2008
  
• U.S. Retail Price Inflation (ShadowStats), 1970 to 2008.

Note that with any data set, you can convert amounts for one year past the last year of available data: 2071 for retail prices, and 2009 for wages, medical costs, December-to-December retail prices, and ShadowStats retail prices.

The Inflation Calc Options window also lets you turn dollar-and-cents formatting on or off. The default setting is on.

• U.S. Retail Price Inflation (Annual Average): This measure of inflation is often quoted in news stories and is the basis for cost-of-living adjustments (COLAs) by Social Security and many union contracts. It's also known as the Consumer Price Index (CPI) or CPI-Urban (CPI-U). It represents the annual average of monthly inflation rates in a calendar year. This is the default data set in Tom's Inflation Calculator.

• U.S. Wage Inflation: New since version 6.0 is a data set for U.S. wage inflation since 1914. This data is useful for comparing wage growth over the years. Also, note that one proposal for reforming Social Security is to tie the annual COLAs to wage inflation for lower-income recipients, and to tie the COLAs to price inflation for higher-income recipients. My Inflation Calculator lets you compare those two inflation rates.

• U.S. Medical Cost Inflation: New since version 4.0 is a data set for calculating U.S. medical cost inflation going back to 1936. This data is actually part of the overall CPI-U. My thanks to Sam Baker for suggesting this addition. To use this data set, click the Options button and choose it in the Inflation Calc Options window. Please note that this data set tracks the inflation of actual medical costs, not the inflation of health-insurance premiums, which are rising faster than medical costs.

• U.S. Retail Inflation, December to December: New since version 7.1 is a data set for calculating U.S. retail price inflation using the government's December-to-December data instead of the government's annual average data. The difference is subtle. The December-to-December data compares retail prices in December of a given year with retail prices exactly one year earlier. The annual average data is the mean average of inflation rates for all 12 months in a calendar year.

  Over time, the difference between these two inflation rates rarely matters. However, my Inflation Calculator now includes the December-to-December data because some news stories refer to it, and occasionally, people ask why the inflation rates in my program seem to vary from those they heard about elsewhere. (For example, in 2008, the annual average inflation rate was 3.8%, whereas the December-to-December inflation rate was 0.1%.)

  The annual average rate is used more widely, so my program defaults to it. The December-to-December data is available by clicking the Options button and selecting the data set in the Inflation Calc Options window. Note that this data covers only the years 1914 to present, unlike the annual average data, which covers the years 1666 to 2070.

• U.S. Retail Inflation, ShadowStats: New since version 7.2 is a data set for calculating U.S. retail price inflation using statistics not compiled by the U.S. government. Instead, this data set is provided with the permission of ShadowStats, a private organization. (My thanks to ShadowStats author John Williams and his associate, Mark Readdie, for their cooperation.)

  ShadowStats data is an alternative to the official inflation data from the U.S. Bureau of Labor Statistics. ShadowStats claims to make a more accurate estimate of inflation. In general, ShadowStats says that actual inflation is higher than the government's official statistics. I cannot vouch for the accuracy of ShadowStats data, just as I cannot vouch for the accuracy of U.S. government data. ShadowStats data is proprietary and copyrighted. Although ShadowStats has kindly granted me permission to use some of its data in my Inflation Calculator, my program is not permitted to display the data. For information about ShadowStats, see www.shadowstats.com.

New since version 7.0.7: the window that appears after clicking the Show Rates button also displays the cumulative inflation rate for the range of years selected. Note that the cumulative rate is derived iteratively, not merely by summing the inflation percentages for each year. The cumulative number shows the total amount of inflation during the years selected. Thanks to Cy Coleman for suggesting this feature.

ShadowStats alternative inflation data is proprietary and cannot be displayed by my program.

Note: This program assumes the target year isn't finished yet, so it doesn't include the target year's inflation rate in the calculation. For instance, if you calculate inflation from 1990 to 2008, the program uses inflation rates from 1990 through 2007 to compute the answer. To include the target year's inflation rate in the calculation, choose a target year one year past your target -- e.g., 2008 for 2007.

In other words, the program has a worst-case error of 12 months and an average error of 6 months. In the worst case, it will understate the actual amount of inflation by 12 months if the target date of your target year is December 31. If the program were written to include the target year's inflation rate in the calculation, the worst-case error would still be 12 months, except it would tend to overstate the actual amount of inflation if the target date of your target year were January 1. I've chosen the first method because you're more likely to be seeking an inflation-corrected amount for sometime during the target year, not for the last day of the year. (However, note that if you display the annual inflation rates by clicking the Show Rates button, the target year's rate will appear in the window, even though it's not included in the calculation.)

The most widely quoted inflation rate is the U.S. government's Consumer Price Index (CPI), 1914 to present, as compiled by the U.S. Bureau of Labor Statistics. By default, my Inflation Calculator uses the CPI-U (CPI-Urban) data, not seasonally adjusted (data series CUUR0000SA0). Data before 1914 was mostly reconstructed by economists from old records and is less reliable. The wage-inflation data (CPI-W) is also from the U.S. Bureau of Labor Statistics, 1914 to present (data series CWUR0000SA0). The medical-cost data is a subset of the government's CPI but has been tracked only since 1936 (data series CUUR0000SAM). The December-to-December retail inflation is also from the U.S. Bureau of Labor Statistics and extends from 1914 to present (data series CUUR0000SA0). The ShadowStats retail-inflation data is from a private organization, not the U.S. government.

Retail inflation figures for future years through 2019 are forecasts from the Congressional Budget Office. Retail inflation figures for future years beyond 2019 are my own guesstimates, based on an average rate of 3.0 percent per year.

If you want to learn more about how the U.S. Bureau of Labor Statistics gathers inflation data, the San Francisco Chronicle published an interesting article about a BLS "shopper." These professional shoppers spend their days canvassing stores, checking retail prices on the kinds of products American consumers are buying. The article was published on April 30, 2006, and is headlined, "A Measure of What's in Store". On February 24, 2008, the San Francisco Chronicle published an article discussing the shortcomings of the CPI: "Consumer Price Index a Real Guessing Game".

Some people believe the U.S. government deliberately distorts its inflation statistics for nefarious reasons. For instance, some Social Security retirees believe they are cheated out of larger cost-of-living adjustments because the government understates the actual CPI, which is the basis for adjusting Social Security benefits. Other people assert that the government overstates the CPI. People who occasionally write to me on this subject never provide data to support their claims. However, for a contrarian view of U.S. inflation statistics, see ShadowStats.com, which has granted me permission to use its alternative inflation statistics as an alternative data set in my Inflation Calculator.

For an interesting Italian inflation calculator with lots of features, see www.rivaluta.it

Penn State University has a Living Wage Calculator that accounts for differences in cost of living in various parts of the U.S. It's part of Penn State's Poverty in America Project.