Inflation Calculator

Calculate how inflation will decrease the purchasing power of your money over time.

₹1,00,000
₹1,000₹1,00,00,000
6%
1%15%
10Yr
1Yr50Yr
Current Cost
₹ 1,00,000
Cost Increase Due to Inflation
₹ 79,085
Future Cost
₹ 1,79,085

Understanding the Inflation & Purchasing Power

What is Inflation?

Inflation is the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. In simple terms, inflation means your money will buy less tomorrow than it does today.

How is it Calculated?

The calculator uses the compound interest formula in reverse. The future cost of an item is calculated as Future Cost = Current Cost × (1 + Inflation Rate)^Years. Because inflation compounds annually, prices rise exponentially over long periods.

The Hidden Tax

Inflation is often called the "hidden tax" on savings. If you keep ₹1,00,000 in a safe for 10 years and inflation averages 6%, the purchasing power of that money will drop to nearly half. This is why investing your money in assets that beat inflation (like equities or real estate) is crucial for wealth preservation.

Frequently Asked Questions

What causes inflation?

Inflation is primarily caused by an increase in the money supply relative to the size of the economy. This usually happens through 'demand-pull' (more demand than supply) or 'cost-push' (rising costs of raw materials passing onto consumers).

Is high inflation always bad?

While hyperinflation destroys economies, central banks typically target a low, stable inflation rate (usually 2-4%). A low rate of inflation encourages spending and investing rather than hoarding cash, which fuels economic growth.

How do I protect my savings from inflation?

The only way to protect your savings from inflation is to invest it in assets that offer a higher return rate than the inflation rate. If inflation is 6%, parking money in a 4% savings account means you are losing 2% of your wealth in real terms every year.