Money

How Does Inflation Affect Savings? Tables You Can Reuse

Inflation lowers what a fixed sum can buy. See the formula, computed tables for 5, 10, 20 and 30 years, and a grid of real returns for different savings rates.

November 2, 2026 · 6 min read

Inflation reduces savings by making the same amount of money buy less each year. The number in your account does not fall, but the goods and services it pays for become more expensive. If your money earns less interest than the rate of inflation, you can buy less with it every year.

This article gives the formula, then two tables computed for this article: what €10,000 is worth after 5, 10, 20 and 30 years, and the real yearly return for different savings rates. After that come the latest official inflation figures. It is general education, not personal financial advice.

What inflation does to a fixed sum of money

Inflation is the rate at which the overall prices of goods and services change over time. The European Central Bank (ECB) says its primary objective is to preserve the purchasing power of the euro, and that it considers 2% inflation over the medium term the best way to do this (ECB).

Purchasing power means how much you can buy with a given amount of money. When prices rise, the same amount buys less.

Two terms help here:

• Nominal value is the number you see, for example €10,000.
• Real value is what that number can buy, measured in today's prices.

The ECB also notes that an unexpected increase in inflation lowers the value of savings and of debt, which transfers wealth from savers to borrowers (ECB). It adds that higher inflation is especially harmful for low-income households with limited investment options.

The formula

If inflation is a constant rate i every year, prices after n years are multiplied by (1 + i)^*n*. From this follow two results:

1. The real value of a sum is the sum divided by (1 + i)^*n*.
2. The sum you need to keep the same purchasing power is the sum multiplied by (1 + i)^*n*.

If your savings earn a net rate r (after tax and costs), the final amount is the sum multiplied by (1 + r)^*n*. Divide that by the price factor to get its real value. The real yearly return is (1 + r) ÷ (1 + i) − 1. It is positive only when the interest beats inflation. The same formulas are described on the MoneIT calculator page (MoneIT).

Table 1: what €10,000 that earns nothing is worth later

The figures below were computed for this article with the formula above. They show the real value, in today's euros, of €10,000 kept unchanged, for four constant inflation rates.

| Years | 1% a year | 2% a year | 3% a year | 5% a year | |---|---|---|---|---| | 5 | €9,514.66 | €9,057.31 | €8,626.09 | €7,835.26 | | 10 | €9,052.87 | €8,203.48 | €7,440.94 | €6,139.13 | | 20 | €8,195.44 | €6,729.71 | €5,536.76 | €3,768.89 | | 30 | €7,419.23 | €5,520.71 | €4,119.87 | €2,313.77 |

How to read it: at 3% a year, €10,000 left untouched for 10 years can buy what €7,440.94 buys today. At the same 2% rate, keeping the purchasing power of €10,000 for 20 years needs €14,859.47 (10,000 × 1.02^20).

A small difference in the yearly rate becomes a large difference over a long time. With the formula ln 2 ÷ ln(1 + i), money that earns nothing loses half of its purchasing power in about 35 years at 2% inflation, about 23 years at 3% and about 13 years at 5.4% (MoneIT gives the formula; the last two numbers are computed here).

Table 2: real yearly return for different savings rates

This table answers a question the first table does not: what happens when the money does earn interest. It shows the real yearly return, (1 + r) ÷ (1 + i) − 1, for a net savings rate r (after tax and costs) and an inflation rate i. All values are computed for this article.

| Net savings rate | Inflation 1% | Inflation 2% | Inflation 3% | Inflation 5.4% | |---|---|---|---|---| | 0% | −0.99% | −1.96% | −2.91% | −5.12% | | 0.5% | −0.50% | −1.47% | −2.43% | −4.65% | | 1% | 0.00% | −0.98% | −1.94% | −4.17% | | 2% | +0.99% | 0.00% | −0.97% | −3.23% | | 3% | +1.98% | +0.98% | 0.00% | −2.28% | | 4% | +2.97% | +1.96% | +0.97% | −1.33% |

How to read it: a negative number means the balance grows more slowly than prices, so purchasing power falls even though the balance rises. A zero means the purchasing power stays the same. The 5.4% column is the October 2026 Italian rate described in the next section, used here as a scenario.

A worked case from the grid: €10,000 at a net 1% a year for 10 years becomes €11,046.22. With inflation at 3% a year, that is worth €8,219.43 in today's euros. At a net 3% the real value stays at €10,000.00.

The real return depends on the rate you actually receive after tax and costs. The advertised rate is not the same number, so check what your own account pays.

What the official figures say now

Inflation does not stay at 2%. Three official sources show how much it moves:

• ISTAT, the Italian statistics office, estimated on 30 October 2026 that the Italian consumer price index (NIC) rose 5.4% on an annual basis in October 2026, up from 4.2% in September. The figure is provisional. ISTAT links the acceleration mainly to energy prices. In the same release, the Italian harmonised index (HICP) rose 5.6% on an annual basis (ISTAT).
• Eurostat reports that euro area annual inflation was 3.8% in September 2026, compared with 3.2% in August 2026 (Eurostat).
• The ECB target is 2% over the medium term, for the euro area.

Which figure applies to you? The Italian NIC and HICP describe prices in Italy. The Eurostat figure is an average for the whole euro area, and it is the area the ECB target refers to. The same month gives different numbers in each: for October 2026 ISTAT reports 5.4% for NIC and 5.6% for HICP. If you live in Italy, the Italian figures describe your prices better. If you live in another euro country, use your national statistics office or Eurostat.

A simple reading of the ISTAT number: at 5.4% a year, €1,000 that does not change buys what €948.77 buys today after one year (1,000 ÷ 1.054). This is only a one-year illustration with the October rate. It is not a forecast, and the rate can fall or rise.

Using the free calculator on MoneIT

If you prefer a tool to a spreadsheet, MoneIT has a tool called "MoneIT: inflation calculator". MoneIT is a separate website, not a Pacix Labs tool. According to its page, the calculator is free and needs no registration. You enter a sum, a number of years and an expected yearly inflation rate. It then shows the value in today's euros and the amount needed to keep the same purchasing power. You can also add a net yearly return on your savings. The page and tool are in Italian.

The page says the calculator assumes constant inflation, is not a forecast, and does not apply taxes or costs on the return. You must enter the return already net of those. A free alternative is any spreadsheet: the formulas above are enough.

Checklist

• Write down your net interest rate: the rate after tax and fees, not the advertised one.
• Compare it with the latest inflation figure for your country from its statistics office or Eurostat.
• Calculate the real return: (1 + net rate) ÷ (1 + inflation) − 1, or find your row and column in Table 2.
• Test at least three inflation scenarios, not only 2%.
• Remember that the result is a scenario with one constant rate. Real inflation changes every year.
• For decisions about where to hold money, ask a licensed adviser. Rules and rates change, and this article does not know your situation.

Frequently asked questions

Sources

• European Central Bank: Two per cent inflation target
• European Central Bank: Benefits of price stability
• ISTAT: Consumer prices (provisional data), October 2026
• Eurostat: Inflation in the euro area
• MoneIT: inflation calculator (page in Italian)