Inflation Calculator

Estimate the future cost of goods and understand the eroding power of inflation on your money.

Inflation Details

₹ 10,000
5.0 %
10 Years

Future Cost (After Inflation)

₹ 0

Purchasing Power Loss

₹ 0

Current Value

₹ 0

Year-wise Inflation Impact

Year Start of Year Value Inflation for Year End of Year Value

Understanding the Impact of Inflation on Your Money

Our Inflation Calculator helps you visualize how the purchasing power of your money changes over time.

What is Inflation?

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. This means that over time, your money will buy you less than it could today.

Understanding inflation is crucial for financial planning, as it directly impacts savings, investments, and future expenses.

How Inflation's Future Value is Calculated

The future value of an amount considering inflation is calculated using a formula similar to compound interest:

$$FV = PV \times (1 + IR)^N$$

Where:

  • $FV$ = Future Value (the cost of the item after inflation)
  • $PV$ = Present Value (the current cost of the item)
  • $IR$ = Annual Inflation Rate (as a decimal)
  • $N$ = Number of Years

Why Inflation Matters for Your Finances

Inflation affects various aspects of your financial life:

  • Purchasing Power
    The most direct impact is the reduction in your money's purchasing power. What ₹100 buys today might cost ₹110 or more in a few years.
  • Savings and Investments
    If your savings or investments don't grow at a rate higher than inflation, you are effectively losing money in real terms.
  • Retirement Planning
    Inflation means that the amount of money you'll need for retirement in the future will be significantly higher than current estimates.
  • Cost of Living
    Everyday expenses like groceries, fuel, and utilities tend to rise with inflation, impacting your monthly budget.

Frequently Asked Questions

Most central banks aim for a low and stable inflation rate, typically around 2-3% per year. This is considered healthy for economic growth, avoiding both deflation (falling prices) and high inflation.

To protect your savings, consider investing in assets that historically outperform inflation, such as stocks, real estate, or inflation-indexed bonds. Diversifying your investments is key.

While salaries may increase over time, if the increase is less than the inflation rate, your real (inflation-adjusted) purchasing power decreases. This is why cost-of-living adjustments (COLAs) are sometimes implemented.