Inflation Calculator
See how much something will cost in the future and how much your money will be worth after inflation.
What is the Inflation Calculator?
Inflation is the general rise in prices over time. It means the same amount of money buys less in the future.
How does it work?
Future cost = today’s cost grown at the inflation rate. Purchasing power = today’s amount discounted by inflation.
Formula
Future cost = C × (1 + i)^n
Purchasing power = C ÷ (1 + i)^n
Example
At 6% inflation, something costing ₹1,00,000 today will cost ₹1,79,085 in 10 years; ₹1 lakh will buy what ₹55,839 buys today.
What ₹1 lakh today will cost later
Inflation compounds in the same way as interest. Something that costs ₹1,00,000 today will cost:
| Inflation rate | In 5 years | In 10 years | In 20 years | In 30 years |
|---|
| 4% | ₹1,21,665 | ₹1,48,024 | ₹2,19,112 | ₹3,24,340 |
| 5% | ₹1,27,628 | ₹1,62,889 | ₹2,65,330 | ₹4,32,194 |
| 6% | ₹1,33,823 | ₹1,79,085 | ₹3,20,714 | ₹5,74,349 |
| 7% | ₹1,40,255 | ₹1,96,715 | ₹3,86,968 | ₹7,61,226 |
| 10% | ₹1,61,051 | ₹2,59,374 | ₹6,72,750 | ₹17,44,940 |
What your money will be worth
Turned around, inflation shrinks the value of a fixed sum. At 6% inflation, ₹1 lakh received 10 years from now buys only what ₹55,839 buys today, and ₹1 lakh received in 20 years buys what ₹31,180 buys today.
A quick rule: divide 72 by the inflation rate to find how many years it takes for prices to double. At 6% prices double in about 12 years; at 4%, about 18 years.
Which inflation rate to use for India
India’s official measure is the Consumer Price Index (CPI), published every month by the National Statistics Office. The Reserve Bank of India targets CPI inflation of 4%, within a band of 2% to 6%. Over the past decade, yearly CPI inflation has mostly stayed between about 4% and 7%, with some years outside that range.
For long-term planning, 6% is a common, slightly cautious assumption. Some costs have historically risen faster than the overall index:
- Education, especially private school and college fees: often 8–10% a year.
- Healthcare and hospital costs: often 8–12% a year.
- Rent and property in large cities: varies widely by location.
Why inflation matters for savings
An investment beats inflation only if its return after tax is higher than the inflation rate. A 7% fixed deposit taxed at 30% yields about 4.8% after tax, which barely keeps up with 5% inflation. This is why long-term goals usually need some investments, such as equity, that have historically grown faster than prices.
When planning a goal, first inflate today’s cost to the year you need the money, then work out how much to save. A ₹10 lakh college fee today could cost about ₹26 lakh in ten years at 10% education inflation.
Looking back: past prices in today’s money
To compare a past amount with today, grow it by the inflation that happened in between. A salary of ₹3 lakh in 2016 corresponds to about ₹5.4 lakh today if inflation averaged 6% over the ten years. Official CPI index values give a more precise comparison for specific years.
Frequently asked questions
What inflation rate should I use?
India’s long-run CPI inflation has averaged roughly 5–7%. Education and healthcare costs often rise faster, around 8–10%.
What is the difference between CPI and WPI?
CPI tracks prices that households pay for goods and services and is used for the RBI’s inflation target. WPI tracks wholesale prices of goods traded between businesses and does not include services.
Is high inflation always bad?
It hurts savers and people on fixed incomes. Borrowers with fixed-rate loans benefit, because they repay with money that is worth less. Moderate, stable inflation is considered healthy for an economy.
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