How long would it take for prices to double if inflation ran at 3 percent a year? Most people would need a calculator. With a simple shortcut, you can get a good answer in your head: about 24 years.

That shortcut is the Rule of 72. It is usually taught as a way to estimate how fast investments grow. It works just as well, in reverse, for understanding how inflation eats away at the value of money.

How the rule works

Divide 72 by an annual rate of growth, expressed as a percentage. The result is roughly the number of years it takes for something to double at that rate.

  • At 2 percent a year: 72 ÷ 2 = 36 years to double.
  • At 3 percent: 72 ÷ 3 = 24 years.
  • At 4 percent: 72 ÷ 4 = 18 years.
  • At 6 percent: 72 ÷ 6 = 12 years.
  • At 8 percent: 72 ÷ 8 = 9 years.

The rule is an approximation of compound growth. The exact math uses logarithms, but the Rule of 72 gives a close answer for the rates most people deal with, roughly between 2 and 10 percent.

Using it for inflation

If prices rise at a steady rate, the Rule of 72 tells you about how long it takes for prices to double. That is the same as the time it takes for the purchasing power of a dollar to fall by half.

At 3 percent inflation, prices double in about 24 years. A grocery bill of $100 today would cost about $200 in 24 years, if inflation held steady at that rate. Put the other way, $100 in cash kept in a drawer would buy about half as much after 24 years.

At 2 percent, the Federal Reserve's longer-run inflation goal, measured by the price index for personal consumption expenditures, it takes about 36 years for prices to double. At higher inflation rates, the process speeds up quickly. At 6 percent, prices double in about 12 years. At 9 percent, they double in about 8 years.

Why small differences matter

The Rule of 72 makes it easy to see why a difference of a point or two in inflation is bigger than it sounds.

The difference between 2 percent and 3 percent inflation is just one percentage point. But it changes the doubling time from about 36 years to about 24 years. Over a long retirement or a lifetime of saving, that is a big gap.

This is also why people often compare savings rates with inflation. If a savings account pays 1 percent while inflation is 3 percent, the balance grows slowly in dollars but loses purchasing power over time. The real return, roughly the interest rate minus the inflation rate, is about negative 2 percent a year. At that pace, the Rule of 72 suggests the purchasing power of the savings would be cut in half in about 36 years.

A quick look back

You can also use the rule to sense-check the past. U.S. consumer prices, as measured by the Consumer Price Index, have risen at an average rate of a few percent a year over long stretches of the last several decades, with large swings, including high inflation in the 1970s and early 1980s and again in 2021 and 2022. Using an average of around 3 to 4 percent, the Rule of 72 suggests prices would double roughly every 18 to 24 years. That is a rough guide. For an exact comparison between two specific years, an inflation calculator using actual CPI data gives a much more accurate answer.

Where the rule breaks down

The Rule of 72 is a mental shortcut, not a precise tool. Keep a few limits in mind.

It assumes a steady rate. Real inflation varies from year to year. The rule gives a sense of scale, not a forecast.

It is less accurate at high rates. For rates well above 10 percent, the estimate starts to drift. Some people use 69 or 70 instead of 72 for more precision with continuous compounding or lower rates. For everyday purposes, 72 is fine.

It does not tell you what will happen to your own costs. Your expenses depend on what you buy. Housing, health care, education and food can rise faster or slower than the overall index.

It ignores taxes and fees. For investments, after-tax and after-fee returns are what matter for real growth.

A useful habit

The next time you see an inflation figure in the news, run it through the Rule of 72. Three percent? Prices double in about 24 years. Five percent? About 14 and a half years. It turns an abstract percentage into a timeline you can picture, and it makes clear why money that sits still is quietly shrinking.