Why inflation matters for your money
Inflation is the general rise in prices over time. When prices rise, each rupee buys less than before. A monthly household budget of ₹50,000 today will not cover the same groceries, rent, school fees and travel in 10 years. Inflation quietly reduces the value of cash and of savings that earn less than the inflation rate. Planning for it is essential for retirement, education and any long-term goal.
How to use the inflation calculator
- Enter an amount in today's money, such as your current monthly expenses or the cost of a goal.
- Enter an expected inflation rate. In India, consumer price inflation has often been in the range of 4% to 7% a year; education and healthcare costs have historically risen faster.
- Enter the number of years and read both results:
- Future cost: how much money you will need then to buy what this amount buys today.
- Value in today's money: what this same amount, received in the future, will really be worth.
The formulas
Future cost = Amount × (1 + inflation)years
Present value = Amount ÷ (1 + inflation)years
Example: at 6% inflation, ₹50,000 of expenses today will cost 50,000 × 1.0610 ≈ ₹89,542 in 10 years. Looking the other way, ₹50,000 received 10 years from now will buy only what about ₹27,920 buys today, a 44% loss of purchasing power.
Real return: beating inflation
The real return on an investment is roughly its return minus inflation. A fixed deposit paying 7% when inflation is 6% gives a real return of only about 1%, and less after tax. To grow your purchasing power, long-term savings need to earn more than inflation. The more accurate formula is (1 + return) ÷ (1 + inflation) − 1.
Frequently asked questions
How long does it take for prices to double?
At 6% inflation, about 11.9 years. The calculator shows this for any rate you enter.
Which inflation rate should I use?
For general planning, use a long-term average of official CPI inflation. For specific goals like higher education or medical costs, use a higher rate.
How can I plan to meet a future cost?
Find the future cost here, then use the SIP Calculator to see how much to invest monthly.
Inflation rates in the future are unknown. Results are estimates for planning only.