Inflation Calculator — The Quiet Tax on Your Savings

Prices creep up every year, so the same rupee buys less. See what today's expense will really cost in the future - and what your savings will actually be worth when you need them.

₹
%
Yrs
Future Cost of Today's ₹1.00 L
₹1.79 L
in 10 years at 6% inflation
Price Rise
79.1%
extra you will pay
₹1 L Today Buys Then
₹55,839
worth of today's goods
Beat-It Target
6%+
return needed just to stand still
Cost Climb Over the Years
Purchasing Power: Kept vs Eroded

📌 The Real-Return Reality Check

Year-Wise Cost & Purchasing Power

YearFuture Cost₹1 L That Year Buys (today's goods)Power Lost

The Inflation Formula (With Worked Example)

Inflation compounds exactly like interest - but against you. The same item costs more each year:

Future Cost = Today × (1 + r)n  ·  Purchasing Power = Today ÷ (1 + r)n

Worked Example

Cost today ₹1,00,000, inflation 6%, horizon 10 years:

1. (1.06)10 = 1.79085
2. Future cost = 1,00,000 × 1.79085 = ₹1,79,085
3. ₹1,00,000 held as cash buys only ₹55,839 of today's goods in year 10

Inflation Numbers Worth Knowing (India)

  • Headline CPI: India's long-run consumer inflation averages roughly 5-6%; the RBI targets 4% with a 2-6% band.
  • Your personal rate is higher: Education and healthcare costs in India have historically risen 8-12% a year - plan those goals with a higher slider setting.
  • Real return: FD at 7% with 6% inflation is a real return of about 1% - and that is before tax on the interest.
  • Goals move away: A ₹25 lakh degree today is a ₹45 lakh degree in 10 years at 6%. Use the SIP calculator with the inflated target, not today's price.

Inflation FAQs

Use 6% for general lifestyle goals - close to India's long-run average. For education and medical goals, plan with 8-10%, because those costs have consistently outrun headline inflation. When in doubt, round up: under-saving is harder to fix than over-saving.

No - that is inflation's favourite victim. A savings account paying 2.5-3% while prices rise 6% loses roughly 3% of purchasing power every year. The money looks the same on the statement but buys less each Diwali. This calculator's purchasing-power column shows the erosion year by year.

CAGR measures how fast an investment grew. This calculator measures how fast prices grow. Compare the two: if your investment CAGR is below the inflation rate, your money is growing on paper but shrinking in real life. The real return is roughly CAGR minus inflation.