About the Inflation Calculator
Inflation is the gradual rise in prices that reduces what a rupee can buy. This inflation calculator does two things. It shows what an expense of today is likely to cost after a number of years at an assumed inflation rate and, in reverse, it shows what an amount you will receive in the future is worth in today's money.
It is essential for anyone planning long-term goals such as education, a home, a wedding or retirement, because the target must be set in future prices, not today's. Business owners use it to project rent, wages and input costs, and to judge whether a fixed payment due some years from now, such as a maturity amount or a lease deposit, will still be meaningful.
The result depends on the amount, the inflation rate you assume and the number of years. Inflation is not the same every year or for every item: costs such as education and healthcare often rise faster than the general consumer price index. Over long periods even a moderate rate has a large effect, so it is prudent to test a slightly higher rate than you expect.
How to use it
- 1Choose whether you want the future cost of a current expense or today's value of a future amount.
- 2Enter the amount.
- 3Enter the inflation rate you expect and the number of years.
- 4Read the result and use the inflated figure as the target in your savings plan.
How this is calculated
Future cost = Present cost × (1 + i)^n Value today of a future amount = Future amount ÷ (1 + i)^n i = assumed annual inflation ÷ 100, n = number of years.
Frequently asked questions
How do I calculate the future cost of something?
Multiply today's cost by one plus the inflation rate, raised to the number of years. At 6% inflation, prices roughly double in twelve years, so an expense of ₹1,00,000 today would cost about ₹1,79,000 after ten years. The calculator performs this compounding for any rate and period.
What inflation rate should I assume?
There is no single right number. Consumer price inflation is published officially every month and moves around over time, and the Reserve Bank of India works to a medium-term inflation target. For long-term planning it is prudent to use a rate somewhat above the recent average, and a higher one for education and medical costs.
What does the present value of a future amount mean?
It is what a future sum is worth in today's purchasing power. If you will receive ₹10,00,000 after fifteen years and inflation averages 6%, that money will buy only what about ₹4,17,000 buys today. It helps you judge maturity values and long-dated payments realistically.
How does inflation affect my savings?
If your savings earn less than inflation after tax, their purchasing power falls even though the balance is rising. What matters is the real return, which is roughly the return minus inflation. Long-term goals therefore usually need at least some investments with the potential to grow faster than prices.
Is inflation the same for all expenses?
No. The official consumer price index is an average across a basket of goods and services. Individual items can rise much faster or slower, and a household's own inflation depends on what it spends on. Education, healthcare and city housing have often risen faster than the general index.