Inflation Calculator

Find out what your money will be worth in the future - or what past prices equal today.

📖 What is Inflation?

Inflation is the rate at which the general price level of goods and services in an economy rises over time, which in turn reduces the purchasing power of money. When inflation is at 6%, something that costs ₹1,00,000 today will cost ₹1,06,000 a year from now. Your money buys less with every passing year.

For personal finance, understanding inflation is critical because it determines the *real* return on your investments. If your FD earns 6.5% and inflation is 6%, your real return is only 0.5%. To genuinely grow wealth, your investments must consistently beat inflation by a meaningful margin.

Inflation in India is measured using the Consumer Price Index (CPI), which tracks the average change in prices paid by urban consumers for a basket of goods and services. The Reserve Bank of India (RBI) targets a CPI inflation rate of 4%, with a tolerance band of ±2%. Historically, India's inflation has averaged around 5-6% over long periods, though it can spike during food or fuel price shocks.

The inflation calculator helps you understand two things: the future cost of something you plan to buy, and how much more you need to earn on your investments to preserve purchasing power.

📐 Formula

FV = PV × (1 + r)^n

Future Value Formula:

Where: - FV = Future Value (amount needed in future) - PV = Present Value (today's cost or amount) - r = Annual inflation rate (as decimal, e.g. 6% = 0.06) - n = Number of years

Present Value Formula (reverse):

📖 How to Use This Calculator

Select Future Value to see what today's amount will be worth in the future. Select Past Value to convert a historical amount to today's equivalent.

Enter the starting amount.

Set the inflation rate - use 6% for India as a general estimate.

Set the number of years using the slider.

Click Calculate to see the results.

💡 Example Calculations

Example 1 - Future cost of education

Your child's college fees are ₹5,00,000 today. At 7% annual inflation, what will the fees be in 15 years?

FV = 5,00,000 × (1 + 0.07)^15 = 5,00,000 × 2.759 = ₹13,79,500

You'll need nearly ₹14 lakhs for the same education that costs ₹5 lakhs today.

Try this example →

Example 2 - Retirement planning

You estimate your current monthly expenses at ₹50,000. At 6% inflation, what will you need per month in 25 years?

FV = 50,000 × (1 + 0.06)^25 = 50,000 × 4.292 = ₹2,14,594 per month

Your retirement corpus must generate over ₹2.1 lakhs per month just to maintain today's lifestyle.

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Frequently Asked Questions

What inflation rate should I use?+

Use your country's official Consumer Price Index (CPI) rate. Current approximate rates: USA ~3%, UK ~3–4%, India ~5–6%, Australia ~4%, Canada ~3%, UAE ~3%. Check your central bank or statistics office for the latest figures.

How does inflation affect savings kept in a bank account?+

Most savings accounts pay 2–5% interest, which can be below the inflation rate. Money in a low-yield account loses real value over time. You need investments in higher-return assets like bonds, index funds, or equity to beat inflation.

What is the Rule of 72 for inflation?+

Divide 72 by the inflation rate to estimate how many years it takes for prices to double. At 6% inflation, prices double in 72 ÷ 6 = 12 years. This is a quick mental math shortcut for any currency.

How can I protect my wealth from inflation?+

Invest in broad equity index funds, real estate, gold, or inflation-indexed government bonds. Equity has historically been the best inflation hedge over long periods globally, returning well above inflation.

What is the difference between CPI and PPI inflation?+

CPI (Consumer Price Index) measures price changes from the consumer's perspective - it is the most commonly used inflation measure for personal finance planning. PPI (Producer Price Index) measures wholesale/producer prices. CPI is what matters most for your cost of living.

How much will 1 lakh be worth in 10 years at 6% inflation?+

At 6% annual inflation, 1,00,000 today will have the purchasing power of approximately 55,800 in 10 years - a loss of over 44% in real terms. Put differently, what costs 1,00,000 today will cost 1,79,100 in 10 years. This is why keeping large sums in savings accounts (earning 3-4%) or under the mattress is financially harmful in the long run. Any investment earning less than the inflation rate is losing money in real terms.

What is the current inflation rate in India?+

India's Consumer Price Index (CPI) inflation has averaged 5-7% over the past decade, with food inflation often higher (7-10% in recent years) and core inflation (excluding food and fuel) around 4-5%. The RBI targets a CPI inflation band of 2-6% with a 4% midpoint. For long-term financial planning, using 5-6% as the inflation assumption is prudent. For specific items like healthcare and education, use 8-10% as these have historically inflated faster than the overall CPI.

What is the difference between inflation and deflation?+

Inflation is a general rise in prices over time; deflation is a general fall. While deflation sounds beneficial, it is typically harmful: consumers delay purchases expecting further price drops, businesses cut investment, and debt burdens increase in real terms. Central banks target mild positive inflation (2-4%) as a buffer against deflation. Japan experienced two decades of deflation with stagnant growth, demonstrating its dangers.

What is the real rate of return and how is it calculated?+

Real rate of return = ((1 + nominal rate) / (1 + inflation rate)) minus 1. At 12% nominal return and 6% inflation: real return = (1.12/1.06) minus 1 = 5.66%. This shows the actual gain in purchasing power. A savings account at 4% with 6% inflation has a real return of minus 1.89% - you are losing purchasing power despite earning interest.