FREE TOOLS / Everyday money
Inflation & buying power
What today’s $10,000 buys in ten years. The quiet tax on cash that nobody sends you a bill for.
Your estimate
Equivalent cost in 10 years
$12,189.94
The future cost of the same purchase, assuming the annual inflation rate stays constant. The chart shows nominal cost, not investment growth.
- Cost today
- $10,000.00
- Buying power of unchanged cash, in today’s dollars
- $8,203.48
- Change in nominal cost
- $2,189.94
View all chart values
- Year 0
- $10,000.00
- Year 1
- $10,200.00
- Year 2
- $10,404.00
- Year 3
- $10,612.00
- Year 4
- $10,824.00
- Year 5
- $11,041.00
- Year 6
- $11,262.00
- Year 7
- $11,487.00
- Year 8
- $11,717.00
- Year 9
- $11,951.00
- Year 10
- $12,190.00
What this estimate assumes
- A constant annual inflation rate compounds once a year. Negative rates represent deflation, not invalid input.
- Future cost is nominal NZD. The separate buying-power figure expresses an unchanged cash amount in today’s dollars.
- No interest is earned on the unchanged cash amount. Inflation is an assumption, not a forecast.
For information only, not financial advice. These simplified estimates do not consider your full circumstances. Assumed rates are not forecasts or guaranteed returns. Talk to a financial adviser before making financial decisions.
HOW TO READ THIS TOOL
The quiet tax on cash.
Two sides of one number
The future cost of today’s purchase, and what today’s cash will buy by then. Same rate, opposite directions.
A rate you control
Inflation is an assumption, not a forecast. Try the rate you have lived through recently as well as the long-run target.
Year by year
The chart shows the rising cost at the end of each year, so you can see how quickly a modest rate compounds.
How the model works
A constant annual rate compounds once a year. Future cost is the same purchase at future prices. Buying power is an unchanged cash amount expressed in today’s dollars: the same money, buying less.
What it leaves out
The cash earns no interest in this illustration, so it is deliberately pessimistic for money in a savings account. It does not model wages, house prices or any particular category of spending, which can move very differently from the overall rate.
The assumptions, in full
- A constant annual inflation rate compounds once a year. Negative rates represent deflation, not invalid input.
- Future cost is nominal NZD. The separate buying-power figure expresses an unchanged cash amount in today’s dollars.
- No interest is earned on the unchanged cash amount. Inflation is an assumption, not a forecast.
A FEW GOOD QUESTIONS
Before you
trust the number.
An estimate is only as good as the question behind it. These are the ones people ask most about this tool.
All ten toolsWhat inflation rate should I use?
The Reserve Bank targets 1% to 3% over the medium term, with a 2% midpoint. Recent years have run well above that. Trying both 2% and a higher rate shows how sensitive a long plan is to the assumption.
Does a negative rate work?
Yes. A negative rate models deflation: the future cost falls and the buying power of cash rises. It is valid input, not an error.
Why does this matter for my savings?
Because a savings balance that does not grow at least as fast as inflation is quietly shrinking. Compare the buying-power figure here with what your savings actually earn after tax.
YOUR MONEY. YOUR CALL.
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