New Resource: Inflation Purchasing Power Calculator

The ĠEMMA team has uploaded a new calculator – the ‘Inflation Purchasing Power Calculator’.

Prices have a way of increasing from year to year, so most of the goods and services that we buy tend to cost more next year than they do now. This is called inflation.  Over enough years, even small annual price increases add up cause many goods and services to become more expensive.  For example, the cost of Maltese bread increased from €0.16 in 1992 to €0.99 in 2020.

Another way to look at increasing prices is that the purchasing power of your Euro decreases with time.  So keeping with the same example above the selling price of a loaf of Maltese bread today is 6.2 times more today than the cost of the same loaf of bread 28 years ago.

The Inflation Purchasing Power Calculator lets you see how inflation affects the purchasing power of your money.  Here is an example.

(a)   You have savings of €25,000 (field titled ‘Current Value’) in 2020 ((field titled ‘Starting Year’).

(b)   Assuming an inflate rate of 1% (field titled ‘Inflation Rate’) over a 10 year period up to 2030 (field titled ‘Target Year’) the purchasing power of your €25,000 savings will fall to €22,632 (field titled ‘Value in Real Terms at Target Years).

The figure below represents how the Calculator estimates the purchasing power impact of inflation.