Inflation Calculator
Understand how inflation erodes the purchasing power of your money over time. Plan your savings and investments to stay ahead of rising prices.
Future Value
₹1,79,084.77
Purchasing Power Loss
₹79,085
Loss in %
44.16%
Rising Cost Over Time
Year-by-Year Breakdown
| Year | Future Value | Purchasing Power Loss |
|---|---|---|
| 1 | ₹1,06,000 | ₹6,000 |
| 2 | ₹1,12,360 | ₹12,360 |
| 3 | ₹1,19,102 | ₹19,102 |
| 4 | ₹1,26,248 | ₹26,248 |
| 5 | ₹1,33,823 | ₹33,823 |
| 6 | ₹1,41,852 | ₹41,852 |
| 7 | ₹1,50,363 | ₹50,363 |
| 8 | ₹1,59,385 | ₹59,385 |
| 9 | ₹1,68,948 | ₹68,948 |
| 10 | ₹1,79,085 | ₹79,085 |
How is Inflation Calculated?
The future cost of today's money is calculated using the compound inflation formula:
- FV = Future Value (what the same goods will cost)
- PV = Present Value (today's cost)
- i = Annual Inflation Rate ÷ 100
- n = Number of Years
Frequently Asked Questions
What is inflation? ▼
Inflation is the rate at which the general level of prices for goods and services rises over time, reducing the purchasing power of money. When inflation is 6%, something that costs ₹100 today will cost ₹106 next year.
What is a realistic inflation rate for India? ▼
India's average CPI inflation has historically ranged between 4–7%. The RBI targets 4% inflation with a tolerance band of ±2%. For long-term financial planning, using 6% is a reasonable conservative estimate.
How does inflation affect my savings? ▼
If your savings earn less than the inflation rate, your real purchasing power decreases over time. For example, if inflation is 6% and your FD earns 5%, you're effectively losing 1% of purchasing power each year. This is why investing in inflation-beating instruments like equity is important for long-term wealth creation.
What is purchasing power loss? ▼
Purchasing power loss is the difference between what you'll need to pay in the future versus what you pay today for the same goods or services. It represents the erosion of your money's value due to inflation. A higher inflation rate or longer time period results in greater purchasing power loss.
How can I protect against inflation? ▼
Invest in assets that historically outpace inflation — equity mutual funds, real estate, and gold are common choices in India. Equity has delivered 12–15% CAGR over long periods, well above the 6% inflation average. Diversifying across asset classes helps balance risk while preserving purchasing power.