How it works
Future equivalent cost equals the initial amount multiplied by (1 + annual inflation) to the power of years. Divide by the same factor to measure the purchasing power of an unchanged balance. A negative rate models deflation. The basket and rate remain constant.
Illustrative example
A €100 basket with an illustrative 4% annual increase costs €104 after one year. An unchanged €100 has about €96.15 of initial purchasing power.