How to use the Inflation Calculator
- Enter an amount in today’s rupees.
- Enter the yearly inflation rate you want to assume.
- Enter the number of years.
- Read the future cost, the value of today’s amount in today’s prices and the percentage of purchasing power lost. A year-by-year table follows below.
Formula used
Future cost = Amount × (1 + i)ⁿ. Worth in today’s terms = Amount ÷ (1 + i)ⁿ, where i is the yearly inflation rate and n the number of years.
Worked example
Here is the Inflation Calculator worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Amount today | ₹1,00,000 |
| Inflation rate (per year) | 6 % |
| Number of years | 10 years |
| Result | |
| Cost of the same things later | ₹1,79,085 |
| Worth of today’s amount, in today’s terms | ₹55,839 |
| Purchasing power lost | 44.16% |
Year-by-year effect of inflation
The second column shows what you would need to spend to buy the same things. The third shows what today’s amount would be worth in today’s prices.
| Year | Cost of the same things | Worth of today’s amount |
|---|---|---|
| 1 | ₹1,06,000 | ₹94,340 |
| 2 | ₹1,12,360 | ₹89,000 |
| 3 | ₹1,19,102 | ₹83,962 |
| 4 | ₹1,26,248 | ₹79,209 |
| 5 | ₹1,33,823 | ₹74,726 |
| 6 | ₹1,41,852 | ₹70,496 |
| 7 | ₹1,50,363 | ₹66,506 |
| 8 | ₹1,59,385 | ₹62,741 |
| 9 | ₹1,68,948 | ₹59,190 |
| 10 | ₹1,79,085 | ₹55,839 |
How inflation is calculated
Future cost = Amount × (1 + i)ⁿ, and today’s-terms value = Amount ÷ (1 + i)ⁿ. At 6% inflation for 10 years the multiplier is 1.06¹⁰ = 1.791. So things that cost ₹1,00,000 today would cost ₹1,79,085 in 10 years, and ₹1,00,000 kept as cash would only buy what ₹55,839 buys today. That is a loss of 44.2% of purchasing power.
What different inflation rates do
Small differences in the rate add up over long periods. For ₹1,00,000 over 20 years, 4% inflation gives a future cost of ₹2,19,112, 6% gives ₹3,20,714 and 8% gives ₹4,66,096.
Inflation also differs by item. Education and medical costs have often risen faster than general prices, while some electronics have become cheaper. For a specific goal, use a rate that fits that expense rather than a single national figure.
Using this for retirement and goal planning
If your household spends ₹50,000 a month today, then at 6% inflation the same lifestyle would cost about ₹1,60,357 a month after 20 years. A retirement plan built on today’s expenses would fall far short.
The same logic applies to a child’s college fees or a future home renovation. Work out the cost in today’s money, use this calculator to inflate it to the year you need it, and then plan investments to reach that amount.
Real return: beating inflation
Your real return is roughly your investment return minus inflation. A deposit paying 7% when inflation is 6% grows your purchasing power by only about 1% a year, and after tax it may not grow at all. This is why long-term savers often hold some assets that have historically outpaced inflation, such as equities, along with safer ones.
No rate is certain. Treat the result as a planning guide and revisit your assumptions regularly.
Frequently asked questions
What is inflation?
Inflation is the general rise in prices over time. When it is positive, each rupee buys less than before.
What inflation rate should I assume?
Many planners use a long-run figure of roughly 5% to 7% for general expenses in India, and higher for education and healthcare. It is your assumption, so test several values.
How do I find the future cost of something?
Multiply today’s cost by (1 + inflation rate) for every year. This calculator does that for any amount.
Why does the calculator show two numbers?
One answers “what will I need to spend later?” and the other answers “what is my money worth today in later years?”. They are two views of the same effect.
Does inflation affect fixed deposits?
Yes. If the interest rate after tax is below inflation, your real purchasing power falls even though the balance grows.
Is inflation the same every year?
No. It changes from year to year. The calculator uses one constant rate for simplicity.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.