How does inflation affect my savings?

Inflation reduces what each dollar can buy. If your savings earn less than the inflation rate, you lose purchasing power even though the balance goes up. At 2.5% inflation, money loses about a fifth of its value over 10 years and a third over 15 — which is why cash left in a low-interest account effectively goes backwards.

What is Australia's inflation rate?

The Reserve Bank of Australia targets inflation of 2–3% on average over time. Actual inflation moves year to year with the cost of living, peaking well above target in 2022–23 before easing. This calculator defaults to 2.5%, the midpoint of the RBA's target band, and you can change it.

What return do I need to beat inflation?

To preserve buying power, your money needs to earn at least the inflation rate after tax. To grow it in real terms, you need more than that. With inflation around 2.5% and tax on interest, a savings account paying 3–4% may barely keep pace, which is why many people hold growth assets like shares for long-term goals.

Inflation Calculator

See how inflation quietly eats away at the value of your money — what a sum will really be worth in the future, and how much you'd need to keep the same buying power.

Last verified: 5 May 2026

What will my money be worth later?

Inflation shrinks buying power. At 2.5% — the midpoint of the RBA's 2–3% target — money loses about a third of its value over 15 years. To stand still, your savings must earn at least the inflation rate after tax. Source: Reserve Bank of Australia.

Worked example. $100,000 today, at 2.5% inflation, will buy only about $61,000 worth in 20 years — and you'd need roughly $164,000 then to match what $100,000 buys now.

General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

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