Inflation is the rate at which the general price level of goods and services rises over time, reducing the purchasing power of money. India's CPI inflation has averaged 5-6% per year over the last decade.

Why does inflation matter for investors?

If your investment returns are lower than inflation, you are losing real wealth even as your account balance grows. For example, if your FD earns 7% and inflation is 6%, your real return is only about 0.94% per year.

What is the real return formula?

Real Return = ((1 + Nominal Return) / (1 + Inflation Rate)) - 1. This is the Fisher equation. For example, 12% nominal return with 6% inflation gives a real return of 5.66%, not 6% as simple subtraction would suggest.

What inflation rate should I use for long-term planning?

For general expenses, 6% is a reasonable assumption for India. For specific categories: education 8-12%, healthcare 10-14%, food 5-7%. This calculator lets you set any rate to model different scenarios.

Inflation Calculator

See how inflation erodes the purchasing power of your money over time and understand why beating inflation through investing is essential.

Amount Today

₹

₹10,000₹10,00,00,000

Ten Lakh Rupees

Annual Inflation Rate

1%20%

India's long-run CPI inflation averages 5-6%. Use 7-10% for specific categories like education or healthcare.

Number of Years

yrs

1 yrs40 yrs

Amount Needed in Future

₹17.91 L

Same purchasing power as ₹10.00 L today

Purchasing Power of Today's Money

₹5.58 L

55.8% of today's value

Purchasing Power Erosion

₹7.91 L

Additional amount needed

Purchasing Power Over Time

Year	You Need	Today's Value
Year 1	₹10.60 L	₹9.43 L
Year 2	₹11.24 L	₹8.90 L
Year 3	₹11.91 L	₹8.40 L
Year 4	₹12.62 L	₹7.92 L
Year 5	₹13.38 L	₹7.47 L
Year 6	₹14.19 L	₹7.05 L
Year 7	₹15.04 L	₹6.65 L
Year 8	₹15.94 L	₹6.27 L
Year 9	₹16.89 L	₹5.92 L
Year 10	₹17.91 L	₹5.58 L

This calculator shows how inflation reduces purchasing power. Actual inflation rates will vary by category and year.

What is inflation, and why does it matter?

Inflation is the rate at which prices in the economy rise over time. In India, long-run inflation has averaged 5-6%, with education and healthcare often running higher. The same ₹100 today buys less and less every year - that's inflation eroding your purchasing power. This calculator does two things: shows the future cost of an amount today (forecasts) and shows what an amount in the future is worth in today's money (today's value). It also computes real return - your investment return after subtracting inflation.

How to use the Inflation Calculator

Enter today's amount. What you spend or have today.
Set the inflation rate. Use 6% as a reasonable long-term Indian average.
Enter the number of years. How far into the future to project.
Review the future cost. What today's amount will need to become to buy the same things.
Read the real return. Subtract inflation from your investment return to see real growth.

Formula and method

Future cost = Today's amount × (1 + inflation)^years Real return = ((1 + nominal return) / (1 + inflation)) − 1

Inflation compounds against your money. The future-cost formula projects an expense forward; the real-return formula tells you how much your investment actually grew in purchasing-power terms.

Why inflation should drive every plan

Cash is a slow loss. 6% inflation halves purchasing power in roughly 12 years.
FDs barely keep up. A 7% FD after tax delivers a real return close to zero.
Equity beats inflation over long periods. Historically 10-12% nominal vs 5-6% inflation = 4-6% real.
Plan goals in future rupees. A ₹50 lakh house today is not ₹50 lakh in 15 years.
The retirement reality. ₹50,000/month today is ₹2.5 lakh/month in 30 years at 6% inflation.

What ₹1,00,000 today will need to be in the future

Years	At 5% inflation	At 6% inflation	At 8% inflation
5	≈ ₹1,27,628	≈ ₹1,33,823	≈ ₹1,46,933
10	≈ ₹1,62,889	≈ ₹1,79,085	≈ ₹2,15,892
20	≈ ₹2,65,330	≈ ₹3,20,714	≈ ₹4,66,096
30	≈ ₹4,32,194	≈ ₹5,74,349	≈ ₹10,06,266

Illustrative compounded annually at the chosen inflation rate. Real inflation in India varies year to year.