Inflation Calculator

Inflation is the gradual rise in the general price level of goods and services over time. As prices climb, each unit of currency buys a little less, so your money loses purchasing power even if the number in your account stays the same.

If your savings grow slower than inflation, their real value falls. For example, at 6% inflation, money left in cash loses roughly half its buying power in about 12 years, even though the balance on paper hasn't dropped a single rupee.

India's long-run consumer inflation has averaged around 5-6% per year, while the US has typically averaged closer to 2-3%. Rates vary year to year, so it's wise to test a few different figures in the calculator to see a realistic range.

The key is to earn a return greater than the inflation rate. Keeping too much in idle cash guarantees a loss of real value. Investing in assets like equity mutual funds via a SIP, or locking money in a fixed deposit at a rate above inflation, helps your wealth keep pace with or outgrow rising prices.

They answer two different questions. Future cost tells you how much more you'll need to buy the same thing later, which is vital for goal planning. Purchasing power tells you what your existing money will actually be worth, which shows the real cost of not investing.