Inflation Calculator
Calculate how inflation impacts your purchasing power. See the future cost of your current expenses and understand why your investments must beat inflation.
Current Cost
₹1,00,000
Cost Increase
₹79,085
Future Cost
₹1,79,085
Cost Over Time
₹1,79,085
| Year | Current Cost | Inflation Impact |
|---|---|---|
| 1 | ₹1,00,000 | ₹6,000 |
| 2 | ₹1,00,000 | ₹12,360 |
| 3 | ₹1,00,000 | ₹19,102 |
| 4 | ₹1,00,000 | ₹26,248 |
| 5 | ₹1,00,000 | ₹33,823 |
| 6 | ₹1,00,000 | ₹41,852 |
| 7 | ₹1,00,000 | ₹50,363 |
| 8 | ₹1,00,000 | ₹59,385 |
| 9 | ₹1,00,000 | ₹68,948 |
| 10 | ₹1,00,000 | ₹79,085 |
| Year | Current Cost | Increase | Future Cost |
|---|---|---|---|
| 1 | ₹1,00,000 | ₹6,000 | ₹1,06,000 |
| 2 | ₹1,00,000 | ₹12,360 | ₹1,12,360 |
| 3 | ₹1,00,000 | ₹19,102 | ₹1,19,102 |
| 4 | ₹1,00,000 | ₹26,248 | ₹1,26,248 |
| 5 | ₹1,00,000 | ₹33,823 | ₹1,33,823 |
| 6 | ₹1,00,000 | ₹41,852 | ₹1,41,852 |
| 7 | ₹1,00,000 | ₹50,363 | ₹1,50,363 |
| 8 | ₹1,00,000 | ₹59,385 | ₹1,59,385 |
| 9 | ₹1,00,000 | ₹68,948 | ₹1,68,948 |
| 10 | ₹1,00,000 | ₹79,085 | ₹1,79,085 |
What is Inflation?
Inflation is the rate at which the general level of prices for goods and services rises, causing purchasing power to fall over time. In India, inflation is measured by the Consumer Price Index (CPI) and has historically averaged around 5-7% annually. This means something costing ₹100 today will cost ₹179 in 10 years at 6% inflation.
How Inflation Affects Your Money
- Purchasing power: The same amount of money buys fewer goods over time
- Real returns: Your investment returns must be adjusted for inflation. An 8% FD with 6% inflation gives only 2% real return.
- Retirement planning: You'll need a much larger corpus than you think because future expenses will be higher
- Salary growth: A salary hike below the inflation rate is effectively a pay cut
India's Inflation History
India's CPI inflation has ranged from 3.5% to 12% over the past two decades. The Reserve Bank of India (RBI) targets an inflation rate of 4% (±2%). Key inflation drivers in India include food prices, fuel costs, and global commodity prices.
FAQ: What investments beat inflation in India?
Equity mutual funds (12-15% CAGR), direct stocks, real estate, and gold have historically beaten inflation in India. Fixed deposits (6-7%) barely keep pace with inflation. PPF (7.1%) offers tax-free returns that slightly beat inflation. The key is to invest in a mix of assets that collectively outpace inflation.
FAQ: How is inflation different from price increase?
Inflation refers to a sustained, general increase in the price level across the economy. A single item's price increase is not inflation — it could be due to supply shortage or demand spike. Inflation is measured as a weighted average across a basket of goods and services that a typical household consumes.