How do I calculate money value adjusted for inflation?
Use future value = present value × (1 + annual rate)^years. Example: ₩10,000 in 2000 at an average 2.5% inflation over 25 years equals ₩10,000 × 1.025^25 ≈ ₩18,539 in today's value. Enter two years and an amount, and this calculator shows the conversion in both directions instantly.
How does Korea CPI auto-apply work?
Annual CPI change rates from Statistics Korea (KOSIS) for 1990–2025 are built in. In the Past→Today direction, when both years are within range, the geometric mean of that period's annual rates is automatically used as the average rate. Outside the range, your entered rate is used.
Why geometric mean instead of arithmetic mean?
Inflation compounds — each year's price level multiplies the previous year's. The arithmetic mean overstates this, so the accurate single-rate equivalent of 'X% per year on average' is the geometric mean. Example: the geometric mean of +10% and −10% is about −0.5%, matching the actual cumulative result.
Where does the Korea inflation data come from?
It's the Consumer Price Index (CPI) annual change rate published by Statistics Korea (KOSIS, kosis.kr). CPI is released monthly, and the annual rate is finalized in January of the following year. The 2025 figure here (2.1%) is preliminary and may be slightly revised after the official release.
How much did prices rise during the 1998 crisis and COVID?
Inflation spiked to 7.5% in the 1998 currency crisis (FX and food price shocks), then 2014–2020 was a low-inflation era averaging about 1.0%. After COVID, 2022 hit 5.1% — the highest in 24 years — before stabilizing to 2.1% by 2025. This calculator reflects these actual yearly figures.
Why do I enter the rate manually for 'Today → Future'?
No one can know future inflation. The Bank of Korea's 2% target is commonly used; comparing 2%, 2.5%, and 3% scenarios is a reasonable approach. For reference, Korea's long-run CPI averaged around 3% from 1990–2025 but hovered near 1% in 2014–2020. This is a conversion tool based on your assumption, not a forecast, so it's safer to run conservative, base, and high cases separately as a range.
What is the difference between nominal and real value?
Nominal value is the future number as shown; real value is its purchasing power in today's money. Example: ₩100M in 30 years with 2.5% annual inflation is worth about ₩47.67M in today's purchasing power. A rising nominal amount can still lose real value, so view both together.
What happens if my salary doesn't keep up with inflation?
Your real wage falls. Example: if prices rise 3% but your salary rises only 1%, real purchasing power drops about 2%. Even with a higher nominal salary, your effective standard of living can decline. Enter your current salary and expected inflation to see the real value a few years out.
Does this include exchange rates?
No. This calculator only shows domestic purchasing-power change within a single currency (Korean won). KRW/USD movements, which heavily affect travel, imports, and overseas purchases, are a separate variable from inflation — if the won weakens, your real burden abroad rises even when domestic prices are flat. FX is not part of this conversion; FX gains on overseas asset sales are covered separately in the capital gains tax calculator.
Why must I account for inflation when planning retirement?
Living costs 30 years from now can more than double today's amount. At 2.5% annual inflation, prices are about 2.1× higher in 30 years. To maintain a ₩3M/month lifestyle 30 years out, you'd need about ₩6.3M/month. The FIRE calculator builds this inflation into your target assets.