Inflation Calculator

Calculate the impact of inflation on purchasing power and money value

Calculation Settings

India's average inflation: 4-7% (last decade)

ℹ️ About Inflation

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Understanding inflation helps in financial planning and investment decisions.

Future Cost

₹0

Current Cost:₹1,00,000
Inflation Rate:6% per annum
Time Period:10 Years
Price Increase:₹0

Impact Summary

Today's Value₹1,00,000
Inflation Rate6% annually
Time Period10 Years
Future Value₹0
Difference₹0
Percentage Change0.0%

Purchasing Power

Additional Cost0.0%

What costs ₹1,00,000 today will cost ₹0 in 10 years, assuming 6% annual inflation.

Investment Returns Needed

To maintain purchasing power, your investments must beat inflation:

Conservative (Debt Funds)8% returns
Real Return (after inflation):2.0%
Future Value (inflation-adjusted):₹1,20,553
Balanced (Hybrid Funds)12% returns
Real Return (after inflation):6.0%
Future Value (inflation-adjusted):₹1,73,429
Aggressive (Equity Funds)15% returns
Real Return (after inflation):9.0%
Future Value (inflation-adjusted):₹2,25,902

Future Cost Projection

YearValueCumulative Increase% Change
1₹1,06,000₹6,0006.0%
2₹1,12,360₹12,36012.4%
3₹1,19,102₹19,10219.1%
4₹1,26,248₹26,24826.2%
5₹1,33,823₹33,82333.8%
6₹1,41,852₹41,85241.9%
7₹1,50,363₹50,36350.4%
8₹1,59,385₹59,38559.4%
9₹1,68,948₹68,94868.9%
10₹1,79,085₹79,08579.1%

Impact on Everyday Items

How inflation of 6% will affect common expenses in 10 years:

Cup of Coffee
Today:₹50
In 10 years:₹90
Increase:↑ 79%
Movie Ticket
Today:₹200
In 10 years:₹358
Increase:↑ 79%
Petrol (per litre)
Today:₹100
In 10 years:₹179
Increase:↑ 79%
Monthly Groceries
Today:₹5,000
In 10 years:₹8,954
Increase:↑ 79%
Restaurant Meal
Today:₹500
In 10 years:₹895
Increase:↑ 79%
Electricity Bill
Today:₹2,000
In 10 years:₹3,582
Increase:↑ 79%

Understanding Inflation

Formula

Future Value = Present Value × (1 + inflation rate)^years
Past Value = Present Value / (1 + inflation rate)^years
Inflation Rate = [(Present Value / Past Value)^(1/years)] - 1

What is Inflation?

Inflation is the rate at which the general level of prices for goods and services rises, causing purchasing power to fall. When inflation occurs, each unit of currency buys fewer goods and services. It's measured as an annual percentage increase.

Why Does Inflation Matter?

  • Reduces the purchasing power of money over time
  • Affects savings, investments, and retirement planning
  • Impacts loan repayments (both positively and negatively)
  • Influences interest rates set by central banks
  • Affects salary negotiations and cost of living adjustments
  • Critical for long-term financial planning

Types of Inflation

Demand-Pull Inflation: When demand exceeds supply, driving prices up
Cost-Push Inflation: When production costs increase, raising prices
Built-In Inflation: Wage-price spiral due to worker expectations
Hyperinflation: Extremely rapid, out-of-control inflation (rare)

Historical Inflation Rates in India

2020-2024 Average:~5-6%
2015-2020 Average:~4-5%
2010-2015 Average:~7-8%
Long-term Average (20 years):~5-7%

How to Protect Against Inflation

  • Invest in Equities: Historically outpace inflation over long term
  • Real Estate: Property values often rise with inflation
  • Inflation-Indexed Bonds: Returns adjust with inflation
  • Gold: Traditional hedge against inflation
  • Increase Income: Regular salary increments above inflation
  • Reduce Debt: Inflation erodes the real value of debt over time
  • Diversification: Spread investments across asset classes

💡 Key Takeaways

  • • Inflation silently erodes wealth - plan for it in all financial decisions
  • • Your investments must earn returns higher than inflation to grow real wealth
  • • Long-term goals need aggressive planning to counter inflation impact
  • • Fixed deposits and savings accounts often don't beat inflation after tax
  • • Start investing early to give your money time to compound above inflation