Inflation Scenario Comparator
Compare low, central, and high assumptions.
Inflation Scenario Comparator: Scenario Inputs
Annual percentage rate or benchmark index change.
Inflation & Purchasing Power Analysis
Over 3 years at 3.5% inflation, a $75,000 salary requires $83,154 to retain equal purchasing power. Without matching raises, your real compensation experiences an effective reduction of $7,355 (-9.81%).
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How Inflation Scenario Comparator Works?
The Inflation Scenario Comparator tests three inflation rates. Each scenario uses the same starting pay, raise plan and time span so the effect of inflation is clear.
Enter the pay plan
Type the starting salary, the planned annual raise and the number of years.
Set 3 scenarios
Enter a low, central and high inflation rate, such as 2%, 3.5% and 6%.
Run each scenario
The calculator computes required salary and real pay for each rate.
Compare outcomes
The output table shows which scenarios leave real pay higher or lower than today.
Inflation Scenario Comparator Formula
The Inflation Scenario Comparator formula applies the real-pay equation once per scenario.
Reals = Salary0 × (1 + g)n ÷ (1 + is)n
Requireds = Salary0 × (1 + is)n
Variables
- g
- Planned annual raise
- is
- Inflation rate in scenario s
- n
- Number of years
Worked example
A $75,000 salary with 3% annual raises over 5 years has a real value of $64,971 in the 6% high scenario and $78,749 in the 2% low scenario.
Inflation Scenario Comparator Conversion Table
This table compares 3 inflation scenarios for a $75,000 salary with 3% annual raises over 5 years.
| Scenario | Inflation rate | Nominal pay in year 5 | Required pay in year 5 | Real pay (today's dollars) | Real change |
|---|---|---|---|---|---|
| Low | 2.0% | $86,946 | $82,806 | $78,749 | +5.00% |
| Central | 3.5% | $86,946 | $89,076 | $73,206 | -2.39% |
| High | 6.0% | $86,946 | $100,367 | $64,971 | -13.37% |
What is Inflation Scenario Comparator?
The Inflation Scenario Comparator is a tool that runs one salary through low, central and high inflation assumptions and compares the results side by side. Scenario analysis replaces a single forecast with a range.
The comparator shows the required salary, the real value of planned pay and the real gain or loss in every scenario.
What are the uses of Inflation Scenario Comparator?
There are 4 main uses of the Inflation Scenario Comparator.
Test raise plans
Check whether a raise plan holds up under high inflation, not only under the central case.
Budget for payroll risk
Finance teams size payroll increases across a range of inflation outcomes.
Negotiate indexation
Show why a contract needs inflation protection in the high scenario.
Communicate uncertainty
Present a range instead of a single forecast to employees or clients.
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