Salary Increase to Keep Up With Inflation Calculator
Find the raise you need just to keep pace with inflation, then check whether the raise you were offered is a real gain or a hidden pay cut.
How it works
Salary to keep pace = salary × (1 + inflation) · Real change % = [(1 + raise) ÷ (1 + inflation) − 1] × 100
Inflation quietly erodes a salary that stays flat: prices rise, so the same pay buys less. To simply stand still your salary must rise by the inflation rate. A raise only makes you better off if it beats inflation — and the honest way to combine the two is to divide, not subtract. Dividing (1 + your raise) by (1 + inflation) gives the true change in buying power, which is slightly less than the raise-minus-inflation shortcut because inflation also applies to the raise itself.
Worked example
On a $60,000 salary with 3.5% inflation, you need a 3.5% raise — about $2,100 — just to keep pace, lifting you to $62,100. If you were only offered 3%, your real buying power changes by (1.03 ÷ 1.035 − 1) = −0.48%, so your new $61,800 salary is worth about $59,710 in today’s dollars — a small real pay cut.
Frequently asked questions
Why not just subtract inflation from my raise?
Subtraction is a rough shortcut. Because inflation also raises the price of everything your bigger salary buys, the exact real change is (1 + raise) ÷ (1 + inflation) − 1. It is always a touch lower than raise minus inflation, and the gap widens as both numbers grow.
What inflation rate should I use?
Use the most recent published annual CPI figure for your country as a starting point, or your own personal inflation if your spending is unusual. This tool is only as accurate as the rate you feed it.
Does a raise below inflation mean I lost money?
In nominal terms your paycheque is bigger, but in real buying power it shrank. A 2% raise against 4% inflation means your salary buys roughly 1.9% less than it did last year.
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Educational estimate, not financial advice.