GBP Inflation Calculator - British Pound (1971-2022)

£10,000 in 1971

£118,284.26 in 2020

The inflation rate in the United Kingdom between 1971 and 2020 was 1,082.84%, which translates into a total increase of £108,284.26. This means that 10,000 pounds in 1971 are equivalent to 118,284.26 pounds in 2020. In other words, the purchasing power of £10,000 in 1971 equals £118,284.26 in 2020. The average annual inflation rate between these periods was 5.17%.

Inflation timeline in the United Kingdom (1971 - 2020)

The following chart depicts the equivalence of £10,000 due to compound inflation and CPI changes. All values are equivalent in terms of purchasing power, which means that for each year the same goods or services could be bought with the indicated amount of money.

All calculations are performed in the local currency (GBP) and using 6 decimal digits. Results show only up to 2 decimal digits to favour readability. Inflation data is provided by governments and international institutions on a monthly basis.

The following table contains relevant indicators:

Indicator	Value
Cumulative inflation from 1971 to 2020	1,082.84%
Avg. Annual inflation from 1971 to 2020	5.17%
CPI 1971	9.21
CPI 2020	108.9

How to calculate the time value of money with inflation data?

There are several ways to calculate the time value of money. Depending on the data available, results can be obtained by using the Consumer Price Index (CPI) formula or the compound interest formula.

Using the CPI formula

When we have both the start and end years, we can use the following formula:

Value_t =Value₀ ×

CPI_t/CPI₀

To obtain the values equivalent in buying power between 1971 and 2020, use the corresponding CPI values:

Value₂₀₂₀

=Value₁₉₇₁ ×

CPI₂₀₂₀/CPI₁₉₇₁

=£ 10,000 ×

108.9/9.21

≈£118,284.26

Alternative: Using the compound interest formula

Given that money changes with time as a result of an inflation rate that acts as compound interest, we can use the following formula: FV = PV × (1 + i)ⁿ, where:

FV: Future Value
PV: Present Value
i: Interest rate (inflation)
n: Number of times the interest is compounded (i.e. # of years)

In this case, the future value represents the final amount obtained after applying the inflation rate to our initial value. In other words, it indicates how much are £10,000 worth today. There are 49 years between 1971 and 2020 and the average inflation rate was 5.1711%. Therefore, we can resolve the formula like this:

Value₂₀₂₀

=PV × (1 + i)ⁿ

=£10,000 × (1 + 0.051711)⁴⁹