Required Inflation Raise Calculator
Find the raise maintaining purchasing power.
Required Inflation Raise Calculator: 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 Required Inflation Raise Calculator Works?
The Required Inflation Raise Calculator works by measuring inflation from the month of the last raise to the month of the next raise.
Enter the current salary
Type the salary set at the last raise.
Enter the last raise date
Pick the month the current salary took effect.
Enter the next raise date
Pick the month the next raise takes effect, or use today.
Read the required raise
The output shows the percentage raise, the dollar raise and the new salary that keeps purchasing power intact.
Required Inflation Raise Calculator Formula
The Required Inflation Raise formula subtracts one from the index ratio between the last raise month and the next raise month.
Required Raise % = (CPInext raise ÷ CPIlast raise − 1) × 100
Required Raise % = [(1 + a)months ÷ 12 − 1] × 100
Variables
- CPIlast raise
- Index value in the month of the last raise
- CPInext raise
- Index value in the month of the next raise
- a
- Annual inflation rate, when index values are not used
Worked example
At 3.6% annual inflation, a $68,000 salary unchanged for 18 months needs a 5.45% raise, or $3,705, to keep purchasing power.
Required Inflation Raise Calculator Conversion Table
This table shows the required raise for a $68,000 salary at 3.6% annual inflation, by months since the last raise.
| Months since last raise | Required raise | Dollar raise | New salary | Basis points |
|---|---|---|---|---|
| 6 | 1.78% | $1,213 | $69,213 | 178 bp |
| 12 | 3.60% | $2,448 | $70,448 | 360 bp |
| 15 | 4.52% | $3,074 | $71,074 | 452 bp |
| 18 | 5.45% | $3,705 | $71,705 | 545 bp |
| 24 | 7.33% | $4,984 | $72,984 | 733 bp |
| 36 | 11.19% | $7,612 | $75,612 | 1,119 bp |
What is Required Inflation Raise Calculator?
The Required Inflation Raise Calculator is a tool that finds the percentage raise needed to restore purchasing power lost since the last pay increase. The required raise equals the cumulative inflation over the months since that increase.
The calculator counts the exact months since the last raise, so a raise 18 months after the previous one needs a larger percentage than a raise after 12 months.
What are the uses of Required Inflation Raise Calculator?
There are 4 main uses of the Required Inflation Raise Calculator.
Prepare for a review
Know the minimum raise that avoids a real pay cut before the meeting starts.
Account for late raises
Measure the extra inflation built up when a review slips past 12 months.
Check a raise offer
Compare an offered raise with the required raise in percent and dollars.
Set HR policy
Set a cost-of-living floor for raises based on months since the last adjustment.
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