Salary Growth vs Inflation Comparator
Compare pay growth with price growth.
Salary Growth vs Inflation 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 Salary Growth vs Inflation Comparator Works?
The Salary Growth vs Inflation Comparator works by building 2 indexes from yearly pay raises and yearly inflation rates.
Enter yearly raises
Type each year's raise, or the salary for each year.
Enter yearly inflation
Type or load the inflation rate for each year.
Build both indexes
Both series start at 100 and compound by their yearly rates.
Read the gap
The output shows the pay index, price index, the gap and the real change since the start.
Salary Growth vs Inflation Comparator Formula
The Salary Growth vs Inflation formula compounds 2 indexes from 100 and compares their ratio.
Payt = 100 × Π (1 + gk)
Pricet = 100 × Π (1 + πk)
Real % = (Payt ÷ Pricet − 1) × 100
Variables
- gk
- Pay growth in year k
- πk
- Inflation in year k
Worked example
After 5 years, the pay index stands at 120.5 and the price index at 122.6. Real pay is -1.70% against the start.
Salary Growth vs Inflation Comparator Conversion Table
This table compares a pay index and a price index over 5 years with example rates.
| Year | Raise | Inflation | Pay index | Price index | Real change since start |
|---|---|---|---|---|---|
| Year 1 | 3.0% | 1.2% | 103.0 | 101.2 | +1.78% |
| Year 2 | 3.5% | 4.7% | 106.6 | 106.0 | +0.61% |
| Year 3 | 4.0% | 8.0% | 110.9 | 114.4 | -3.11% |
| Year 4 | 4.5% | 4.1% | 115.9 | 119.1 | -2.74% |
| Year 5 | 4.0% | 2.9% | 120.5 | 122.6 | -1.70% |
What is Salary Growth vs Inflation Comparator?
The Salary Growth vs Inflation Comparator is a tool that tracks a pay index and a price index on the same scale, both starting at 100, and shows the gap between them each year. A pay index above the price index means real pay is higher than at the start.
The comparator shows the gap in index points and as a real pay change, so the trend is clear year by year.
What are the uses of Salary Growth vs Inflation Comparator?
There are 4 main uses of the Salary Growth vs Inflation Comparator.
See the trend
Watch whether pay pulls ahead of prices or falls behind over several years.
Find the turning point
Spot the year real pay went from a gain to a loss.
Chart progress
Plot 2 indexes on one chart for reviews and reports.
Compare employers
Compare pay index paths at 2 employers against the same price index.
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