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Summary
The salary inflation calculator adjusts a past salary for inflation to show what it would be worth in today’s money, or projects a current salary forward to show its future purchasing power. A £30,000 salary in 2015 had significantly more purchasing power than £30,000 today. The calculator uses official ONS inflation data (CPI or RPI) to make the comparison.
How it works
Inflation adjustment formula
Today’s equivalent = Past salary x (CPI today / CPI in past year)
Or equivalently:
Real salary change = (New salary / Old salary) / (CPI new / CPI old) - 1
If your salary increased by 10% but prices increased by 12%, your real salary fell by approximately 1.8%.
CPI vs RPI
- CPI (Consumer Price Index) — the government’s primary measure of inflation. Excludes housing costs (mortgage interest, council tax).
- CPIH — CPI including owner-occupiers’ housing costs. Increasingly used as the headline measure.
- RPI (Retail Price Index) — an older measure that includes mortgage interest costs. Tends to run 0.5-1% higher than CPI. Still used for some contracts and student loans but no longer classified as a National Statistic.
What “real terms” means
A “real-terms pay cut” means your salary increased by less than inflation. Your nominal pay went up, but your purchasing power went down. UK public sector workers experienced significant real-terms pay cuts during 2021-2024 when inflation peaked at over 10% while pay rises were limited to 2-5%.
Worked example
Salary in 2018: £35,000, Salary in 2025: £42,000
- CPI in January 2018: 104.4 (2015 = 100)
- CPI in January 2025: 130.0 (approximate)
- Inflation factor: 130.0 / 104.4 = 1.245
- 2018 salary in today’s money: £35,000 x 1.245 = £43,575
- Actual 2025 salary: £42,000
- Real-terms change: (£42,000 / £43,575) - 1 = -3.6%
- Despite a £7,000 nominal increase, this person has had a real-terms pay cut of about 3.6%
Inputs explained
- Original salary — the salary at the starting date
- Current/target salary — the salary at the comparison date
- Start year — when the original salary was earned
- End year — the comparison year (defaults to current year)
- Inflation measure — CPI, CPIH, or RPI
Outputs explained
- Inflation-adjusted salary — what the original salary is worth in today’s money
- Real-terms change — the percentage gain or loss in purchasing power
- Cumulative inflation — total price increase between the two dates
- Annual average inflation — the compound annual rate over the period
Assumptions & limitations
- Uses annual average CPI/RPI figures from the ONS. Monthly data would give slightly different results depending on the exact dates chosen.
- Personal inflation may differ significantly from CPI. If your spending is heavily weighted toward housing, energy, or childcare, your inflation rate may be higher.
- The calculator assumes UK-wide inflation. Regional price differences are not captured.
- Historic CPI data is available from 1988. RPI data goes back further. For earlier periods, the Bank of England’s millennium dataset provides estimates.