Inflationλ is a financial modeling utility that eliminates manual inflation calculations. It's particularly valuable in any multi-period projection model where costs or revenues need to be escalated over time using one or more inflation assumptions.

How it Works

1. Input: The function reads an input table containing Annual Inflation Rates and their Effective Dates (when each rate begins). 

2. Scheduling: Internally, the function uses the effective dates to place those annual rates under the appropriate timeline headings.

3. Conversion: It then reads the timeline to determine its periods (months, quarters, years) and converts effective annual rates into equivalent periodic rates using the interest rate conversion formula: Period Rate = (1 + Annual Rate) ^ (1 / Periods Per Year) -1

4. Compounding: The periodic rates are then compounded and converted from percentages to factors.

5. Output: The result is a series of inflation factors can be multiplied by a monetary amount to adjust that amount for the effect of inflation.

Practical Use Cases

Example