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Inflation Calculator

Calculate how inflation erodes purchasing power over time.

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How the inflation calculator works

This calculator uses the standard compound inflation formula: Future Value = Present Value × (1 + Rate)^Years. Enter an amount, select a from-year and to-year, and set the annual inflation rate. The tool shows you what that amount will be worth (in terms of equivalent purchasing power) at the target year.

Why inflation matters for long-term planning

Even modest inflation compounding over decades has a dramatic effect. At 6% inflation, prices double roughly every 12 years (the Rule of 72). A retirement corpus that seems adequate today may cover only half the expenses 15 years later. This is why financial planning must always account for inflation, not just nominal returns.

Suggested inflation rates for planning

  • General expenses: 6% (India CPI long-run average)
  • Healthcare: 8–12% (medical inflation runs higher)
  • Education: 8–10% (tuition fees rise faster than CPI)
  • Food: 5–8%
  • Fuel / transport: 4–6%

Frequently asked questions

What is inflation?
Inflation is the rate at which the general price level of goods and services rises over time, eroding purchasing power. When inflation is 6%, something that costs ₹100 today will cost ₹106 in one year. Central banks typically target 2–4% annual inflation as a sign of a healthy, growing economy.
What is India's average inflation rate?
India's Consumer Price Index (CPI) inflation has averaged around 5–7% per year over the past decade. The RBI targets a CPI inflation rate of 4% with a band of ±2%. Food inflation tends to run higher (7–10%) while manufactured goods inflation is typically lower.
How does inflation affect savings?
If your savings account earns 4% interest but inflation is 6%, your real return is −2% — your money is actually losing purchasing power. This is why financial planners recommend investing in assets that historically beat inflation, such as equities, real estate, or inflation-linked bonds.
What is the difference between CPI and WPI?
CPI (Consumer Price Index) measures the average change in prices paid by urban consumers for a basket of goods and services. WPI (Wholesale Price Index) measures price changes at the wholesale/producer level before goods reach consumers. CPI is more relevant for personal financial planning; WPI is used as a proxy for producer-level inflation.
What is real vs nominal return?
Nominal return is the stated return without adjusting for inflation. Real return = ((1 + Nominal) ÷ (1 + Inflation)) − 1. For example, a 10% nominal return with 6% inflation gives a real return of approximately 3.77%, not 4%. Always compare investments using real returns for a fair comparison.

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