Select the initial price, current price, or total price change rate to solve, then enter the other two values for the same period.
Reverse Inflation Formula
The reverse inflation calculation is based on the relationship between an initial price, an inflation rate, and the current price after inflation.
- CP = current price after inflation
- IP = initial price before inflation
- IR = total price change over the stated period, as a percentage
The calculator can solve for the selected value when the other two values determine a unique answer. Enter the total change over the period, not an annual rate spanning several years; compound annual changes first. Individual item price changes are not necessarily the same as broad inflation measured by a price index.
- To find current price: enter the initial price and inflation rate.
- To find initial price before inflation: enter the current price and inflation rate.
- To find inflation rate: enter the initial price and current price.
Common Inflation Rate Effects
This table shows how different inflation rates affect an item that originally cost $100.
| Inflation Rate | Initial Price | Current Price | Increase |
|---|---|---|---|
| 2% | $100.00 | $102.00 | $2.00 |
| 5% | $100.00 | $105.00 | $5.00 |
| 10% | $100.00 | $110.00 | $10.00 |
| 25% | $100.00 | $125.00 | $25.00 |
Reverse Inflation Examples
Example 1: Find the initial price before inflation
You know the current price is $120 and the inflation rate is 20%.
The initial price before inflation was $100.00.
Example 2: Find the inflation rate
You know the initial price was $80 and the current price is $92.
The inflation rate was 15%.
Reverse Inflation Calculator FAQ
What does reverse inflation mean?
Reverse inflation means working backward from a price after inflation to find the earlier price before inflation. For example, if an item costs $150 now after 25% inflation, reverse inflation can show that the original price was $120.
How do you calculate the original price before inflation?
Divide the current price by 1 plus the inflation rate written as a decimal. For example, with a current price of $210 and inflation of 5%, calculate $210 / 1.05. The original price was $200.
Can the inflation rate be negative?
Yes. A negative inflation rate means the price decreased instead of increased. This is often called deflation. For example, if a price falls from $100 to $90, the inflation rate is -10%.
