# Calculating inflation rate

This is my maths problem (It is NOT homework help, just me trying to learn basics of this bit of maths):

A car cost £14,000 in May 1994, the inflation rate then was 1.9%, but the current inflation rate today is 1.7% so what would it be worth today?

I am not sure what the correct calculation to do for inflation rates is; I can do the basics of exchange rate calculations, but inflation rates (what-did-X-item-cost-then-and-how-much-is-it-now) are an area I am struggling with.

Any help appreciated! ;)

• If we assume that the inflation rate was around $1.8\%$ during that period (it was larger) then the general buying power of $14000$ in 1994 is about the same as the general buying power of $(14000)(1.018)^{20}$ today. That's about $20000$. (The calculator gave $20002.47$, but that kind of precision is absurd for this problem.) – André Nicolas May 15 '14 at 15:26