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Inflation Calculator

See how inflation erodes purchasing power and find the real return on your investments

tuneAdjust Inputs
Current Amount
₹
≈ 1 Lakh
Annual Inflation Rate
% p.a.
1%15%
Time Period
Years
1 yr30 yrs
Investment Return (optional)
% p.a.
0%20%
Future Cost (Same Value)
₹1,79,085
≈ 1.79 Lakh after 10 years
Purchasing Power Today
₹55,839
Real value of ₹1L in 10 yrs
Today's Amount
₹1,00,000
Current value
Value Lost to Inflation
₹44,161
44.2% purchasing power lost
Inflation Rate
6% p.a.
Annual CPI inflation
Real Return (After Inflation)
5.66% p.a.
Beating inflation
Lost
44.2%
Purch. Power Retained ₹55,839
Value Lost ₹44,161

functions Inflation Formulae

Future Cost = P × (1 + inf/100)ⁿ

Purch. Power = P / (1 + inf/100)ⁿ

Real Return = ((1+r)/(1+inf) − 1) × 100

How Inflation Erodes Purchasing Power

Inflation erodes the purchasing power of money over time. Something that costs ₹1,000 today may cost ₹1,791 in 10 years at 6% annual inflation. Planning without accounting for inflation leads to a significant savings shortfall at retirement.

This calculator shows the future cost of today's expenses, the real value of your money after N years, and how much extra return you need to beat inflation on your investments. The Real Return figure is crucial: if your FD earns 7% but inflation is 6%, your real return is only about 0.94% per year.

lightbulb Example Calculation
Scenario: ₹1 lakh today at 6% inflation for 10 years
1Future Cost = 1,00,000 × (1.06)^10 = ₹1,79,085
2Purch. Power = 1,00,000 / (1.06)^10 = ₹55,839
3Real Return (12% invest) = (1.12/1.06)−1 = 5.66%
✓ ₹1L today buys what ₹55,839 will buy in 10 years — 44% purchasing power lost
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Frequently Asked Questions

Inflation and purchasing power explained for financial planning

What inflation rate should I use for long-term financial planning?
India's CPI inflation has averaged around 5–7% over the past decade, with a long-term RBI target of 4% (±2% tolerance band). For conservative planning, use 6–7%. For education or healthcare expenses — which inflate faster than general CPI — use 8–10%. Always err on the higher side to avoid undersaving.
How does inflation affect fixed deposits?
FD interest rates in India typically range from 6–8%, while inflation is 5–7%. After tax on FD interest (30% for the highest bracket), your post-tax FD return may be 4.2–5.6% — often below or barely above inflation. This means FDs may not grow your real wealth; they primarily preserve capital. For long-term goals, equity investments with higher real returns are necessary.
Why is the "Rule of 72" useful for understanding inflation?
Divide 72 by the inflation rate to estimate how many years it takes for prices to double. At 6% inflation, prices double in 72/6 = 12 years. At 8%, they double in 9 years. If retirement is 24 years away at 6% inflation, prices will quadruple — your retirement corpus must be 4× your current estimate of expenses.

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