How the inflation calculator works
Inflation is the slow rise in prices that makes each rupee buy less over time. Enter a future amount, an expected yearly inflation rate and the number of years. The calculator shows what that amount is worth in today's purchasing power and how much of its value is lost.
This matters for every long-term goal. A target of ₹1 crore sounds large today, but it may buy far less in 20 years. Use the result to set goals in future rupees and to check whether your investment return really beats inflation.
To bring a future amount back to today's money, divide it by one plus the inflation rate i, raised to the number of years n.
Value in today's money = Future amount ÷ (1 + i)n
Frequently asked questions
How do I calculate the effect of inflation?
Divide the future amount by (1 + inflation rate) raised to the number of years. For example, ₹1 crore received after 20 years, with inflation at 6%, is worth about ₹31.18 lakh in today's money.
What inflation rate should I use for India?
The Reserve Bank of India targets consumer price inflation of 4%, with a tolerance band of 2 percentage points on either side. For long-term goals many people plan with 5% to 7%, and use a higher rate for costs such as education and healthcare, which tend to rise faster.
What is purchasing power?
Purchasing power is the amount of goods and services a sum of money can buy. When prices rise and your money does not, purchasing power falls.
How can I beat inflation?
Your investments need to earn more than inflation after tax and costs. That difference is your real return. Use the investment calculator to compare different return rates with the inflation rate you assume.