Average Inflation from a Purchasing-Power Comparison
Turns a felt loss of value ("this amount today buys what X cost back then") into the average annual inflation rate. A conversion rate covers currency changes such as Deutsche Mark to euro; set it to 1 for the same currency.
Type values, assign them with the value keys and press "Solve". It is the same financial calculator as under "Calculator" in the menu above.
The amount today is first converted into the old currency (amount × rate) and divided by what the same goods cost back then: that is the price factor. Its n-th root minus 1 is the average annual inflation rate – the same formula as for the return on a one-off investment, only with prices instead of capital. The odd rate of 1 € = 1.95583 DM was fixed irrevocably on 31 December 1998; it came from the value of the ECU, the basket of European currencies, on the last trading day. In everyday life it became "one euro is two marks". With the cash changeover in 2002 prices were converted in different ways: many were divided correctly by 1.95583 or rounded down in the customer's favour, but some everyday prices went straight from 1 DM to 1 € – hence the German nickname "Teuro" (from "teuer", expensive). This calculator checks whether the feeling holds: enter your own estimate under "buys what once cost"; for the same currency set the conversion rate to 1.
Inverse of compounding: the n-th root of the price factor. Price factor = amount today × conversion rate ÷ amount then (all in old currency units).
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