Enter your current salary, past salary, and the inflation rate over that time period into the salary inflation calculator. The calculator will return the gain or loss in salary minus the rate your salary should have increased due to inflation over the same period.
Salary Inflation Formula
The following formula can be used to calculate the net gain or loss in salary while taking into account inflation.
NS = FS – IS – IS*I
- Where NS is the net salary gain
- IS is the initial salary
- FS is the final salary
- I is the inflation rate over the time from IS to FS
Salary Inflation Definition
A salary inflation is a measure of the net gain of salary after inflation has been taken into account.
How to calculate salary inflation?
How to calculate salary inflation
- First, determine your initial salary.
This will be your starting salary at the time you wish to analyze.
- Next, determine your final salary.
This will be your ending salary at the time period you are looking at.
- Next, determine the inflation rate during that time.
This information can be readily found on the world wide web. A simple google search for inflation during the time period should provide the information you need.
Calculate your net salary gain using the formula and information above.
Inflation is a term used in economics used to describe the decreasing value of money. In other words, over time goods and services cost more and more, the average rate of increase of these services is the inflation rate.
Since inflation happens almost every year, any year you are not receiving a raise, you are effectively losing money. That’s because the same amount of money the prior year would be able to purchase more goods than currently.
The average inflation rate varies between 1-3% on a yearly basis. This can vary outside those rates depending on the year.