Inflation Calculator
See how inflation raises future costs and erodes the value of today's money.
What costs ₹1,00,000 today will cost in 10 years:
₹1,79,085
That's ₹79,085 more due to inflation.
₹1,00,000 kept as cash will be worth (in today's terms) after 10 years:
₹55,839
A loss of ₹44,161 in purchasing power — why cash needs to be invested.
How the Inflation Calculator works
Reviewed by Dinesh Babu · Last updated July 2026
Inflation is the gradual rise in the general price level that quietly erodes what each rupee can buy. This calculator answers two related questions: how much something that costs a certain amount today will cost in the future, and how much today's money will actually be worth (in today's purchasing power) after years of inflation.
Both directions use the same compounding idea as investment growth, just working against you. Future cost grows by (1 + inflation)^years; the future purchasing power of a fixed rupee amount shrinks by dividing by the same factor. The rate you enter is an assumption about the future — treat it as a planning input, not a fact.
The practical lesson is blunt: cash left idle loses value every year. To preserve or grow purchasing power, your investments must earn more than the inflation rate — otherwise you are going backwards in real terms even as the rupee figure rises.
Inflation impact
Future cost = Amount × (1 + r)^n · Future value of today's money = Amount ÷ (1 + r)^n
r = assumed annual inflation rate, n = years. Real return ≈ nominal return − inflation.
Nominal vs real return — the number that actually matters
A fixed deposit paying 7% sounds like growth, but if inflation runs at 6%, your real return is only about 1% — and after tax on that 7%, it can turn negative. Real return, roughly nominal minus inflation, is what tells you whether your wealth is actually growing in purchasing-power terms.
This is why beating inflation, not just earning a positive number, is the real goal. An investment that returns 7% while prices rise 6% is barely holding its ground.
What inflation rate should you assume?
India's retail (CPI) inflation has often sat in the region of 5–6% in recent years, though it varies year to year and by what you buy — education and healthcare costs have frequently risen faster than the headline figure. This calculator uses whatever rate you enter, so choose one that reflects your own basket of expenses rather than blindly using the headline number.
Because the future is uncertain, it is sensible to run the calculator at a couple of rates (say 5% and 7%) to see how sensitive your plan is to the assumption.
| Years | At 5% inflation | At 7% inflation |
|---|---|---|
| 5 | ₹78,350 | ₹71,300 |
| 10 | ₹61,390 | ₹50,830 |
| 20 | ₹37,690 | ₹25,840 |
| 30 | ₹23,140 | ₹13,140 |
What ₹1 lakh of expenses becomes
A lifestyle costing ₹1,00,000 a month today, at 6% assumed inflation, will cost 1,00,000 × 1.06^20 ≈ ₹3,20,700 a month in 20 years. Your expenses would more than triple without any change in how you live — the core reason retirement planning must inflate today's costs.
The shrinking rupee
₹10,00,000 kept as cash, with 6% inflation, buys only 10,00,000 ÷ 1.06^15 ≈ ₹4,17,300 worth of goods in 15 years' terms — it has lost about 58% of its purchasing power despite the number on the note staying the same.
Common mistakes to avoid
- Planning for retirement using today's expenses. Over 20–30 years, inflation can triple or quadruple your monthly costs — ignoring it badly undershoots the corpus you need.
- Judging an investment by its nominal return alone. A 7% return with 6% inflation is barely growth; always think in real (inflation-adjusted) terms.
- Assuming your personal inflation equals the CPI headline. Healthcare, education and lifestyle costs often rise faster than the official average.
- Holding too much in cash or low-yield accounts for the long term, where inflation quietly eats the balance.
Frequently asked questions
What inflation rate should I use for India?+
India's retail (CPI) inflation has often been around 5–6% in recent years, though it varies. Many people plan with roughly 6%, but you should pick a rate that matches your own spending — costs like healthcare and education have frequently risen faster. The rate you enter is an assumption, not a guarantee.
Why does inflation matter for my savings?+
If your savings earn less than inflation, you lose purchasing power over time even though the rupee balance grows. Money that merely keeps pace with inflation is standing still in real terms; to build wealth, your investments must outpace it.
What is the difference between nominal and real return?+
Nominal return is the headline rate an investment pays. Real return is roughly the nominal return minus inflation — what your money actually gains in purchasing power. A 7% return with 6% inflation is only about 1% real, and tax can push it lower.
How do I protect my money against inflation?+
By holding assets that have historically outpaced inflation over the long term — such as equity mutual funds — rather than keeping everything in cash or low-interest deposits. Diversification and a long horizon help ride out the volatility that comes with higher-return assets.
Does inflation affect my loan too?+
In a sense it helps borrowers: you repay a fixed loan with rupees that are worth less over time, so inflation quietly reduces the real burden of fixed-rate debt. It hurts savers and helps fixed-rate borrowers.
How much will prices rise over 20 years?+
At an assumed 6% inflation, prices roughly triple over 20 years (1.06^20 ≈ 3.2). So a ₹100 item today would cost about ₹320 — which is why long-term goals must be planned in future rupees, not today's.
Is a fixed deposit a good hedge against inflation?+
Often not, once tax is considered. If an FD pays 7%, inflation is 6%, and you pay tax on the full 7%, your real post-tax return can be near zero or negative. FDs suit safety and short-term needs more than long-term inflation protection.