Inflation Calculator
Calculate inflation impact on money
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About Inflation Calculator
Inflation reduces the purchasing power of money over time. What you can buy for ₹100 today will cost more in the future due to inflation. This calculator helps you understand how much more money you'll need in the future to maintain the same purchasing power.
How Does Inflation Work?
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Inflation is the rate at which prices of goods and services increase
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It's measured by Consumer Price Index (CPI) in India
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Higher inflation means your money buys less over time
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Investments should beat inflation to grow real wealth
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Formula: Future Value = Present Value × (1 + inflation rate)^years
Example:
If ₹1 lakh can buy a car today, with 6% inflation, you'll need ₹1.79 lakhs after 10 years to buy the same car. Your purchasing power erodes by ₹79,000!
Key Benefits
Retirement Planning: Calculate how much corpus you need considering inflation
Goal Planning: Adjust future goals for inflation (child's education, wedding)
Investment Decisions: Ensure returns beat inflation for real wealth growth
Salary Negotiation: Understand real value of salary increments
Budget Planning: Plan for increased expenses in coming years
Financial Awareness: Understand why saving in bank accounts isn't enough
Frequently Asked Questions
What is the current inflation rate in India?
India's inflation rate varies between 4-7% typically. RBI targets to keep inflation around 4-6%. Food inflation is usually higher (7-9%) while overall CPI inflation averages 5-6%. For financial planning, assume 6% inflation to be conservative.
Why should my investments beat inflation?
If your investment returns are below inflation, you're losing purchasing power. For example, if FD gives 6% but inflation is 6%, your real return is 0%. You need investments that give inflation + 4-5% (real return) for actual wealth growth. That's why equity is important long-term.
Which investments beat inflation in India?
Equity mutual funds (12-15% returns), Real estate (8-10%), Gold (8-10%), and Stocks beat inflation long-term. FDs (6-7%), PPF (7.1%), and savings accounts (3%) barely match or lose to inflation after tax. Diversify across asset classes for inflation protection.
How to protect retirement corpus from inflation?
Don't move all retirement money to FDs. Keep 30-40% in equity/balanced funds even after retirement for growth to beat inflation. Use SWP for monthly income instead of FD interest. Keep emergency fund in liquid/short-term debt. Review and rebalance portfolio annually.