Inflation Calculator

What is inflation and how does it affect savings?

Inflation is the rate at which the general price level rises over time, eroding the purchasing power of money. If inflation is 6% p.a., ₹1,00,000 today will only buy goods worth ₹55,840 in real terms after 10 years. Savings that don't grow faster than inflation effectively lose value.

What is India's historical inflation rate?

India's CPI (Consumer Price Index) inflation has averaged around 5–6% p.a. over the past decade. Food inflation runs higher at 6–8%, healthcare at 8–10%, and education costs rise 10–12% annually. The RBI targets 4% inflation (±2% band). Use 6% as a conservative assumption for long-term planning.

How do I protect my savings from inflation?

To beat inflation, your investments must grow faster than the inflation rate. Equity mutual funds historically return 12–15% CAGR, well above 6% inflation. PPF at 7.1% barely beats inflation after tax. FDs at 7% are roughly inflation-neutral. Gold and real estate have beaten inflation over 10–20-year horizons.

What is the difference between real return and nominal return?

Nominal return is the stated return on an investment (e.g., 12% from equity). Real return adjusts for inflation: Real Return ≈ Nominal Return − Inflation Rate. If your equity fund returns 12% and inflation is 6%, your real return is approximately 6%. Real returns show the actual increase in purchasing power.

How much money do I need for retirement considering inflation?

If you need ₹50,000/month today for expenses, at 6% inflation you will need ₹89,542/month after 10 years and ₹1,60,357/month after 20 years. A retirement corpus must be large enough to sustain this growing expense. Financial planners recommend building a corpus of 25–30 times your annual retirement expenses.