How this number is made
A raise that matches inflation leaves purchasing power flat. The real raise is the nominal raise with inflation taken out. The inflation rate is an input, not a published index, so use the period that matches the raise.
- Both pay figures should be the same unit, usually annual salary.
- Inflation of 3 means prices rose 3% over the same stretch as the raise.
Formula
Nominal = new ÷ old − 1. Real = (1 + nominal) ÷ (1 + inflation) − 1.
Worked example
With the figures already in the form, real change is 1.9%.
Questions
Which inflation number?
Whichever you are measuring against. This page does not fetch CPI.
What if I took a pay cut?
The real change is more negative than the nominal cut when prices rose.