worldofcalcsInflation Calculator
About Inflation
Inflation is the rate at which the general level of prices for goods and services rises over time. This calculator helps you understand how inflation erodes purchasing power.
Understanding the Terms
- Nominal Value: The face value of money without adjusting for inflation.
- Real Value: The value of money after accounting for inflation.
- Inflation Rate: The percentage increase in prices over a year.
How to Use
- Enter the current amount you have or want to project.
- Enter the expected annual inflation rate (typically 5-7% for India).
- Enter the number of years into the future.
- View how much you'll need to maintain purchasing power.
What is inflation?
Inflation is the rate at which prices rise over time, which means the same amount of money buys less each year. In India it is measured mainly by the Consumer Price Index (CPI), and the RBI aims to keep CPI inflation at 4%, within a band of 2%–6%. This calculator shows both sides of inflation: what something will cost in future, and what a future amount will be worth in today's money.
Inflation formulas
i is the yearly inflation rate (6% = 0.06) and n the number of years. Multiplying by (1 + i)ⁿ gives the future price of something that costs that amount today. Dividing by (1 + i)ⁿ converts a future amount into today's purchasing power. Both assume a constant rate; actual inflation varies from year to year.
Inflation facts for planning
- The RBI's inflation target is 4% CPI inflation with a tolerance band of 2%–6%, renewed in March 2026 for the period up to March 2031.
- Rule of 72: divide 72 by the inflation rate to estimate how long prices take to double. At 6%, prices double in about 12 years.
- Your personal inflation can differ from CPI. Education, healthcare and housing costs have often risen faster than the overall index.
- Savings accounts and many FDs earn close to inflation; after tax, the real return can be zero or negative.
- Use future costs for goals: an education costing ₹20 lakh today becomes about ₹83.5 lakh in 15 years if those costs rise 10% a year.
Worked example: ₹1 lakh over 10 years at 6%
- Something that costs ₹1,00,000 today will cost ₹1,00,000 × (1.06)¹⁰ = ₹1,79,085 in 10 years
- Seen the other way, ₹1,00,000 received 10 years from now will buy only what ₹55,839 buys today
- So money kept in cash loses about 44% of its purchasing power over 10 years at 6% inflation
- To grow in real terms, your investments need to earn more than inflation after tax
What ₹1 lakh will be worth in today's money
The purchasing power of ₹1,00,000 received in future, at different average inflation rates.
| Inflation rate | 5 years | 10 years | 20 years | 30 years |
|---|---|---|---|---|
| 4% | ₹82,193 | ₹67,556 | ₹45,639 | ₹30,832 |
| 5% | ₹78,353 | ₹61,391 | ₹37,689 | ₹23,138 |
| 6% | ₹74,726 | ₹55,839 | ₹31,180 | ₹17,411 |
| 7% | ₹71,299 | ₹50,835 | ₹25,842 | ₹13,137 |
Assumes a constant inflation rate. Actual inflation varies from year to year.