Inflation: The Silent Tax
Inflation quietly shrinks every dollar that sits still, so every dollar needs a job.
The big idea
Inflation means prices across the economy rise over time, so each dollar buys less. Nobody sends a bill and it never shows on a pay stub, which is why it's called a silent tax. It hits money that just sits, like cash or a low-rate savings account, the hardest.
The numbers
$1 in 1926 = $19.04 today
U.S. prices rose about 2.99% a year on average, 1926–2026. officialdata.org (BLS CPI), Oct 2026.
- Prices rose 3.7% in the 12 months to Sep 2026. BLS, Oct 14, 2026.
- 2.7% for 2025; 9.1% in June 2022, the most since 1981. BLS.
- Average savings rate: 0.38%. FDIC, Oct 2026.
Key terms
- Inflation: prices rising over time, so a dollar buys less.
- CPI: the BLS's Consumer Price Index, the average price change for a basket of what people buy. About 80,000 prices a month.
- Buying power: how much stuff your money can actually get.
- Rule of 72: 72 ÷ a yearly rate ≈ years to double.
The formulas
Buying power later = cash ÷ (1 + inflation)years
Years for prices to double ≈ 72 ÷ inflation rate
Real return ≈ your rate − inflation
Same cart, two years (BLS)
| Item | 2006 | Sep 2026 |
|---|---|---|
| Ground beef, 1 lb | $2.22 | $6.79 |
| Coffee, 1 lb | $3.20 | $9.33 |
| Whole milk, 1 gal | $3.08 | $4.11 |
| Eggs, 1 dozen | $1.31 | $2.27 |
| Regular gas, 10 gal | $25.90 | $44.82 |
| 8-item cart | $40.59 | $74.01 |
2006 = yearly average (BLS data via officialdata.org); 2026 = BLS U.S. city average, September.
$10,000 in cash, earning 0%
| Inflation | 10 yrs | 20 yrs | 30 yrs |
|---|---|---|---|
| 2% | $8,203 | $6,730 | $5,521 |
| 3% | $7,441 | $5,537 | $4,120 |
| 4% | $6,756 | $4,564 | $3,083 |
| 6% | $5,584 | $3,118 | $1,741 |
Example: what it buys in today's dollars. Real inflation changes year to year.
Do this week
- Look up the interest rate (APY) on every account where your cash sits.
- Subtract the latest CPI number (3.7% for Sep 2026). Below zero means that cash is losing buying power.
- Run the lesson's tool on your own cash: what it buys in 10, 20 and 30 years.
- Subtract inflation from your last raise to see your raise in real terms.
- Bookmark bls.gov/cpi. A new CPI number comes out every month.
“Be diligent to know the state of your flocks, And attend to your herds; For riches are not forever, Nor does a crown endure to all generations.”
Proverbs 27:23–24 · NKJVEverOwn Wealth Academy · Education only, not individualized investment, tax or legal advice. Examples are illustrations, not promises; past results don't guarantee future ones. Scripture taken from the New King James Version®. Copyright © 1982 by Thomas Nelson. Used by permission. All rights reserved.