by Natalie Yahr / Wisconsin Watch, Wisconsin Watch
August 6, 2026
Click here to read highlights from the story
- Free, simple tools can help people measure the change in inflation and see whether their pay is keeping up.
- Experts Wisconsin Watch spoke to said that if your wage hasn’t changed and inflation rises, your real earnings decrease.
- Workers can use inflation calculators to seek a raise if their real wages have dropped.
Inflation hit a three-year high in May, leaving a growing number of Americans struggling to afford necessities. The rate has since slowed a bit, but most prices aren’t likely to come down. Analysts say “affordability” could be one of the deciding issues in this fall’s midterm elections.
But while we all notice the spike at the gas pump and the cash register, many people may not realize they can use simple, free tools to quantify the change and figure out whether their pay is keeping up.
Wisconsin Watch talked to two experts about how and why to use inflation calculators. Here’s what they told us.
What is inflation and how do we measure it?
Inflation is a measure of how much prices have risen in a given period. Some increase in prices is to be expected — the Federal Reserve aims for 2% inflation when it sets interest rates. When prices rise quickly, consumers and businesses may struggle to buy what they need.
The U.S. Bureau of Labor Statistics releases monthly inflation reports showing how prices have changed over the month and the year. The most widely used of those measures is the consumer price index, which shows the change in “prices paid by urban consumers for a market basket of consumer goods and services.” In other words, it’s the weighted average of the change in prices of many of the things American consumers buy. According to the bureau, this rate reflects the spending patterns of more than 90% of the U.S. population.
The bureau also publishes a variety of more specific inflation rates, including for different geographic areas and for different types of expenditures, including food and beverages, housing and medical care. It also calculates a second version of its national inflation figure, called the Consumer Price Index for Urban Wage Earners and Clerical Workers, which is based on the spending patterns of households where at least half of the income comes from wage or clerical work.
Meanwhile, the Fed keeps an eye on a related but different inflation measure, the Personal Consumption Expenditures Price Index, as it’s setting interest rates.
How high is inflation today?
The latest consumer price index numbers, released on July 14, indicate prices rose 3.5% over the last 12 months. The numbers also show prices fell 0.4% in June, when adjusted for seasonal changes. The drop over the month came from falling gas prices, though the average cost of a gallon of gas in the U.S. remains about $1.10 higher than it was before the war in Iran began, according to a price tracker from NBC News.
Inflation today is far lower than in 2022, when it hit 8%, the highest in more than 30 years. But 3.5% is still well above the 2% target, said Menzie Chinn, professor of public affairs and economics at the University of Wisconsin-Madison.
“Inflation is not as big of a concern in terms of its absolute value as it was maybe four years ago, but it’s higher than we would want, and going forward we certainly don’t want inflation to be running at this pace,” Chinn said.
Meanwhile, wage growth has slowed, falling behind price growth. Nationally, wages and salaries rose 3.4% between March 2025 and March 2026, according to the latest data from the Bureau of Labor Statistics.
“Concern about prices rising is not just prices rising, but it’s against the backdrop of how fast wages are rising. How many people are keeping up, and what components of the population are keeping up?” Chinn said.
The inflation rate may eventually come down, meaning the rate at which prices are rising slows. And some individual prices, including gas prices, could come down too. But prices overall seldom fall.
“The price level is probably never coming down, unless we have a severe downturn of some sort,” Chinn said.
What are inflation calculators and how do I use one?
Inflation calculators let you enter a dollar value and see how the buying power of that dollar value has changed over time. One easy way to understand this is to think about what a dollar could have bought 50 years ago. Today, that dollar is essentially worth less because you’d need more than a dollar to buy the same goods. An inflation calculator can show you exactly how big the change is: You’d need $5.88 today to buy what a dollar would buy in 1976, according to the Bureau of Labor Statistics’ CPI Inflation Calculator.
For a more practical example, enter your wage or salary at the time of your last raise, indicate the month and year of that raise, then select the latest month for which data is available. That tells you how much that wage or salary is worth in today’s dollars.
You can also do the calculation backward to see the contrast in a different way. For example, if you earn $50,000 and you last received a raise two years ago, your pay today only goes as far as $47,038.95 at the time of your last raise. In other words, your “real salary” has fallen by 5.9%.
“If your wage is stuck and inflation is going up, your real earnings are going down,” said University of Wisconsin-Milwaukee economics professor John Heywood, who directs the school’s graduate program in human resources and labor relations.
You can also use these tools to check whether a given price has been rising faster or slower than inflation. Say your rent was $900 a month in June 2024, and it rose exactly in line with the index for all prices. It would now be $956.65. If it’s risen more than that, it’s outpaced inflation.
Here are links to a few useful inflation calculators:
How can I use the information I get from an inflation calculator?
Inflation calculations can be a helpful tool for workers seeking a raise. Heywood suggests workers seeking raises gather information on both how their real earnings have declined over time and how their earnings compare with those of people in comparable positions in the industry and geographic area, and present that data to their human resources department.
“My impression is that at large corporations and at corporations that sort of follow best practices, they don’t want their workers to be paid less than their rivals or have their earnings go down, because they’re always in a competition for keeping and retaining talent,” Heywood said.
“If you can show, for example, that your wage hasn’t kept up with inflation or with your comparables, then a sensible HR department says, ‘Here’s somebody we might lose,’ and might very well be willing to increase somebody’s hourly or salary rate,” he said.
If you’re represented by a labor union, your union representatives are likely doing these kinds of calculations regularly.
“It’s part of making sure that their members don’t have their earnings eroded by inflation,” Heywood said.
To hold workers’ buying power steady, Heywood said, many union contracts include automatic cost of living adjustments. Six months into the contract period, for example, workers’ wages will rise by the same percentage that prices rose during those six months.
Clauses like those were far more common before the soaring inflation of the 1970s and 1980s, Chinn said, noting that raising wages automatically in response to inflation can sometimes make inflation worse. As economists battled to get prices under control in the 1980s, they became more skeptical of these automatic wage increases.
“It’s good for the workers, it protects their buying power, but that means the cost of making stuff rises … which then feeds into next year’s demands,” Chinn said. Thus even a temporary shock to the economy can last much longer.
But not raising pay comes at a cost too. “If they don’t get that automatic adjustment, it’s more likely they won’t get to maintain the real wage,” Chinn said.
Automatic cost of living adjustments are still common in some industries. “The auto industry uses it, (along with) aerospace, defense, postal workers, letter carriers, and a lot of local public unions,” Heywood said. “It hasn’t gone away.”
What’s the inflation forecast?
Many economists are predicting 2.5% to 3% inflation over the next year, Chinn said. He thinks those predictions are probably about right.
“That’s assuming that we’re not having a big resumption of the war with Iran that completely blocks off indefinitely the Strait of Hormuz,” Chinn said. “That assumes no big collapse in the stock market and no big jumps in a trade war going forward.”
Natalie Yahr reports on pathways to success statewide for Wisconsin Watch, working in partnership with Open Campus. Email her at nyahr@wisconsinwatch.org.
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