Inflation Calculator

Inflation is the rate at which the general level of prices for goods and services rises, eroding the purchasing power of money over time. In India, inflation is measured primarily through the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).

Understanding inflation is crucial for financial planning because it determines how much your money will be worth in the future. An investment that does not outpace inflation results in a real loss of purchasing power, even if the nominal value grows.

• Purchasing Power: ₹1,00,000 today at 6% inflation will buy only ₹55,839 worth of goods in 10 years
• Real Returns: If your investment returns 8% and inflation is 6%, your real return is only about 2%
• Goal Planning: A goal that costs ₹10 lakh today will cost ₹18 lakh in 10 years at 6% inflation
• Retirement Risk: Inflation is the biggest silent threat to retirement savings

The future cost of goods after inflation is calculated as:

Future Value = Present Value × (1 + inflation rate)^years

To find the present value of a future amount:

Present Value = Future Value / (1 + inflation rate)^years

India's average CPI inflation over the past two decades has been approximately 5-7% per year, though it varies significantly across categories like food, housing, healthcare, and education.

• Step 1: Enter the current cost of an item or your total expenses
• Step 2: Set the expected inflation rate (e.g., 6% for general, 10% for education)
• Step 3: Input the number of years into the future
• Step 4: See what the same goods or lifestyle will cost in the future