Inflation Calculator
See how the rising cost of living affects your savings and future purchasing power.
₹
%
Yr
Current Cost₹ 1,00,000
Cost Increase+₹ 0
Future Cost₹ 0
What is an Inflation Calculator?
An Inflation Calculator is a financial tool that helps you understand the impact of inflation on your money. It calculates the future value of a current amount or the equivalent past value of a current amount, based on a specific inflation rate. This is crucial for long-term financial planning, as it shows how much your money will be worth in real terms in the future.
How It Works
The calculator uses the compound interest formula to determine the future cost of goods or services. It assumes a constant average inflation rate over the specified period.
Future Value = Present Value * (1 + Inflation Rate)^Number of Years
Example Calculation
Scenario
You want to know what ₹1 Lakh today will be worth 20 years from now with 6% inflation.
- 1.Present Value = ₹1,00,000
- 2.Inflation Rate = 6%
- 3.Time Period = 20 Years
- 4.Future Value = 1,00,000 * (1 + 0.06)^20
- 5.Result = ₹3,20,713
- 6.Insight: You will need ₹3.2 Lakhs in 2044 to buy what ₹1 Lakh buys today.
Why This Tool is Useful
- ✓Helps in setting realistic retirement goals.
- ✓Shows the 'real' return on your investments (Return - Inflation).
- ✓Assists in salary negotiation by factoring in cost of living increases.
- ✓Prevents under-saving for long-term goals like child's education.
- ✓Highlights the importance of investing in assets that beat inflation.
Tips & Comparison
- •Beat Inflation: To grow your wealth, your investment returns must exceed the inflation rate. Fixed Deposits often barely match inflation post-tax.
- •Education Inflation: Education costs in India are rising faster (10-12%) than general inflation (6%). Plan accordingly.
- •Lifestyle Creep: As income rises, expenses tend to rise. Account for this 'lifestyle inflation' in your planning.
- •Diversify: Invest in a mix of equity, gold, and real estate to hedge against inflation.