What €100 today will buy in 20 years
At 2% inflation - the rate most central banks target - €100 of today’s shopping costs €148.59 in twenty years. No shock, no crisis: the target worked exactly as designed, and the money quietly shrank anyway. That is what a “stable” inflation target actually delivers over two decades.
The table
| Years | At 2% | At 5% | At 10% |
|---|---|---|---|
| 10 | €121.90 | €162.89 | €259.37 |
| 20 | €148.59 | - | - |
| 35 | €199.99 | - | - |
Each figure is what you would need to spend in that future year to buy exactly what €100 buys today, assuming inflation holds steady at the stated rate. At 2%, prices roughly double over 35 years. At 5%, the same ten years that cost €21.90 extra at 2% now cost €62.89 extra. At 10%, they cost €159.37 extra.
Reading it
The gap between those columns is bigger than intuition suggests, because inflation compounds. A rate five times higher than 2% does not produce a cost five times higher - it produces a much larger gap, because each year’s price rise is calculated on a base that already includes every previous year’s rise. Ten years at 10% costs more than double what ten years at 5% costs, even though 10% is only twice 5%. This is the same mechanism that makes compound interest grow savings faster than a flat rate would suggest - run in reverse, against your money’s purchasing power instead of for it.
It also means small differences in assumed inflation matter far more over 35 years than over 10. Planning around 2% versus 3% inflation barely changes a ten-year figure, but the gap widens every year that follows.
The mirror image
The same effect works backwards on money you are promised in the future. €10,000 to be received in 30 years buys only €5,520.71 of today’s goods, assuming 2% inflation throughout. The number on the cheque does not shrink - what it can buy does. This is why a future payout, a pension figure, or a fixed sum in a contract needs to be read in today’s terms before it means anything. €26,533 promised in 20 years, at the same 2% assumption, buys about €17,856 of today’s goods - already worth noticeably less than the figure suggests, and that is with inflation nowhere near its higher-rate extremes.
The gap between a nominal rate of return and its real value works the same way. Earning 5% while inflation runs at 2% leaves you with a real return of 2.94% - not the 3% that simple subtraction implies, because that shortcut ignores the compounding between the two rates. The distortion is small at low rates. At 10% nominal against 8% inflation, the real return is 1.85%, while subtraction would claim 2% - a gap worth noticing when rates are high. Run the same shortcut at 2% nominal against 5% inflation and the honest answer is a real return of -2.86%: money not just failing to grow, but losing ground.
Try your own numbers
These figures all use round, illustrative rates. Real inflation moves year to year rather than holding one number for decades, so treat any 20-year projection as a shape of the problem, not a forecast. Use Around’s inflation calculator to run your own combination of amount, rate and time frame.