Inspectable Data Source — Inflation Adjustment

Pay Off Mortgage vs Invest Calculator
Version 1.0
Last updated: February 2026

Transparent arithmetic is the operating system of this calculator.

This page publishes the data source and transformation rule used when “Inflation-adjusted (real)” mode is enabled in the Mortgage vs Invest calculator.

No opinions. No hidden assumptions. Just arithmetic.

Purpose

The Mortgage vs Invest calculator produces results in nominal dollars by default. When “Inflation-adjusted (real)” mode is enabled, those nominal values are converted into inflation-adjusted dollars using a long-term Canadian CPI average.

This page documents: the CPI dataset used, how the long-term inflation rate was derived, and how that rate is applied.

Data Source

Inflation is derived from:

Canada — Consumer Price Index (CPI)
Source: Statistics Canada

The full CPI history used in this calculation is published here:

Historical Inflation Rates (CPI) — Canada

The dataset currently begins in 1960 and includes annual CPI inflation rates from 1960 to the most recent available year.

Method of Derivation

Let:

• π_t = published annual CPI inflation rate for year t
• N = total number of years in the dataset (1960 through latest year)

The inflation rate used in this calculator is the simple arithmetic mean of annual CPI inflation rates:

Using the current dataset, this produces:

This value represents the long-term historical average of Canadian CPI inflation since 1960.

Default Inflation Rate

The calculator’s default inflation assumption is:

3.73% per year

This value is defined in the calculator’s display layer and is used unless the user overrides it with a custom inflation rate.

Custom Inflation Rate Override

The calculator allows users to enter their own inflation rate.

• If a custom rate is entered, the custom rate replaces the 3.73% default.
• Only the display conversion changes.
• Mortgage amortization, investment growth, and home price compounding remain unchanged.

How Inflation Adjustment Is Applied

Let:

• V = nominal dollar value (net worth, investment value, home value, mortgage balance, or interest totals)
• T = selected time horizon in years
• i = inflation rate (default 3.73%, or user-entered value)

When real mode is enabled, the calculator displays:

This adjustment is applied to:

• Net worth
• Investment portfolio value
• Home value
• Mortgage balance
• Total interest paid
• Total interest earned
• All chart series values

Interpretation

The inflation-adjusted view answers: “What would this future value be worth in today’s dollars, assuming a long-run Canadian inflation rate of 3.73% (or the rate I choose)?”

This is not a forecast of future inflation. It is a contextual long-term adjustment based on historical CPI behavior.

Important Distinctions

• The 3.73% figure is a simple average of annual CPI inflation rates.
• It is not a CPI index CAGR.
• It is not a weighted average.
• It is not a forecast.
• It is a historical long-run reference rate.

Limitations

• Inflation is modeled as a constant annual rate.
• Only Canadian CPI data is used.
• Year-to-year inflation volatility is not modeled.
• Real values are discounted using the full selected time horizon T.

If any discrepancy is identified between this documentation and the calculator output, the calculator implementation governs.