Inflation Impact Calculator
Understand how inflation affects the purchasing power of your money over time
See the real impact of inflation on your savings and plan better for the future by accounting for rising costs.
Calculate Impact
💡 Tip: Adjust the inflation rate to see how different scenarios affect your purchasing power over time.
Understanding Inflation Impact
What is Inflation?
- A general increase in prices and fall in purchasing power
- Erodes the value of money over time
- Essential to consider in long-term financial planning
Why Track Inflation?
- Plan for future expenses accurately
- Ensure your investments beat inflation
- Maintain your standard of living in retirement
How It Works
This calculator uses the compound inflation formula to show how prices increase over time:
FV = PV × (1 + r)^t - • FV = Future Value (amount needed to maintain purchasing power)
- • PV = Present Value (current amount)
- • r = Annual inflation rate
- • t = Time period in years
Beating Inflation
To protect your wealth from inflation, your investments should earn returns higher than the inflation rate:
- Equities: Historically provide returns that beat inflation over the long term
- Real Estate: Property values typically rise with inflation
- Diversification: Spread investments across different asset classes
Why Our Inflation Calculator Stands Out
Real-World Scenarios
Calculate future costs of education, healthcare, housing, and daily expenses based on India's historical inflation rates of 4-7%.
Purchasing Power Analysis
See exactly how much your current savings will be worth in the future and how much you need to maintain your lifestyle.
Year-by-Year Breakdown
Visual representation of how prices increase each year, helping you plan investments to beat inflation effectively.
How to Use the Inflation Calculator
Enter Current Cost or Amount
Input the current cost of what you're planning for - education, house, car, or your current savings amount.
Set Inflation Rate
Enter expected inflation rate. India's average inflation is around 5-6%. Use 8-10% for education/healthcare, 3-4% for general goods.
Choose Time Period
Select how many years ahead you want to project. For retirement planning, use 20-30 years; for child's education, use 10-15 years.
Analyze Future Value
See the inflated cost and compare with current value. Use this to determine how much you need to save and invest today.
Frequently Asked Questions
What is the current inflation rate in India?
As of 2025, India's retail inflation (CPI) hovers around 5-6% annually. However, inflation rates vary by category: healthcare and education inflate at 8-10%, food at 4-6%, and general goods at 3-5%. The Reserve Bank of India targets to keep inflation within 2-6% range. Use category-specific rates for accurate future cost projections.
How does inflation affect my savings?
Inflation erodes purchasing power. If you have ₹10 lakhs today and inflation is 6%, it will buy only goods worth ₹9.4 lakhs next year. Over 10 years at 6% inflation, ₹10 lakhs will have the purchasing power of only ₹5.58 lakhs. This is why your investments must earn returns higher than inflation to actually grow your wealth.
What investments can beat inflation in India?
Equity mutual funds historically return 12-15% annually, beating inflation by 6-9%. Real estate appreciates 6-8% yearly. Gold gives 8-10% returns. Even debt instruments like tax-free bonds (5-6%) barely beat inflation. Bank savings accounts (3-4%) and traditional FDs (6-7%) often fail to beat inflation after taxes. Diversify across equities, real estate, and gold for inflation protection.
How much will ₹1 crore be worth in 20 years?
At 6% inflation, ₹1 crore today will have the purchasing power of only ₹31.18 lakhs in 20 years - a 69% erosion in value! At 5% inflation, it's worth ₹37.69 lakhs; at 7%, just ₹25.84 lakhs. This shows why retirement planning requires substantial corpus - you need to account for 20-30 years of inflation impact.
What will be the cost of ₹1 lakh education in 10 years?
Education inflation in India is typically 8-10% annually. At 8% inflation, a ₹1 lakh course today will cost ₹2.16 lakhs in 10 years. At 10% inflation, it will be ₹2.59 lakhs. For a 4-year engineering degree costing ₹20 lakhs today, you'd need approximately ₹43-52 lakhs in 10 years. Start investing early with education-focused SIPs.
How to calculate real rate of return?
Real return = [(1 + nominal return) / (1 + inflation rate) - 1] × 100. For example, if your investment returns 12% and inflation is 6%, real return = [(1.12/1.06) - 1] × 100 = 5.66%. This is your actual wealth growth. Always focus on real returns, not just nominal returns, to ensure you're actually building wealth.