A raise only makes you better off if it is larger than inflation. Enter your old salary, your new salary or raise percentage and the inflation rate over the same period to see your real raise, the salary you would need just to keep up, and your actual gain or loss in purchasing power.
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Inflation
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Use your country's consumer price index (CPI) change for the period.
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Enter your values to see the result.
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How to use the Raise vs Inflation Calculator
Enter your old salary and choose whether it is per year, month or hour.
Enter your new salary, or switch to raise percentage and enter that.
Enter the inflation rate for the same period, as a total or a yearly rate with the number of years.
Read your real raise: positive means more purchasing power, negative means less.
Check the table to see how the result changes at other inflation rates.
Purchasing power gain or loss = new salary − keep-up salary
Inflation over several years = (1 + yearly rate)years − 1
Example: $60,000 rising to $62,400 is a 4% raise. With 3% inflation the keep-up salary is $61,800, so the real gain is $600 a year and the real raise is 1.04 ÷ 1.03 − 1 = 0.97%.
Real raise = (1 + nominal raise) ÷ (1 + inflation) − 1. For a 4% raise with 3% inflation: 1.04 ÷ 1.03 − 1 = 0.97%. Subtracting (4% − 3% = 1%) gives a close estimate, but the division is exact.
What salary do I need to keep up with inflation?
Multiply your old salary by (1 + inflation). With $60,000 and 3% inflation you need $61,800 just to stay even. Anything above that is a real gain in purchasing power; anything below is a real pay cut.
Which inflation rate should I use?
Use the change in your country's consumer price index (CPI) over the same period as the raise, usually the last 12 months. National statistics offices publish it monthly (in the US, the Bureau of Labor Statistics). Your personal inflation can differ if your spending is heavy in categories like rent or food.
How do I handle several years without a raise?
Choose 'per year' for the inflation rate and enter the number of years. The calculator compounds it: 3% a year for 3 years is 1.03³ − 1 = 9.27% total, so a salary that hasn't changed has lost about 8.5% of its purchasing power.
Is the result before or after tax?
It compares the salaries you enter. Using gross salary is standard. Because taxes are progressive, a raise can be slightly smaller after tax, so your real take-home gain may be a little lower.
What is the difference between a cost-of-living raise and a merit raise?
A cost-of-living adjustment (COLA) is meant to offset inflation so your real pay stays the same. A merit raise rewards performance and is meant to increase your real pay. If your total raise is at or below inflation, you effectively received only a cost-of-living adjustment.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.