What inflation does to your money
Inflation is the steady rise in prices over time. It is easy to ignore from month to month, because the changes are small. Over ten or twenty years, though, it changes everything. The same groceries, school fees and hospital bills cost far more, and money that sits idle quietly loses what it can buy.
For long-term planning, inflation is not a side detail. It is often the single biggest reason a retirement plan that looks comfortable on paper falls short in real life. If you plan for a goal in today's prices, you will save too little.
What this calculator shows
- Future cost: what something that costs a given amount today will cost after a number of years, at the inflation rate you choose.
- Purchasing power: what a sum of money will really be worth if it just sits as cash, measured in today's rupees.
- The rate behind a price rise: enter what something cost then and what it costs now, and the calculator works out the average yearly inflation rate. This is handy for choosing realistic rates for your own goals.
Worked examples
Future cost. Something that costs ₹1 lakh today will cost about ₹1.79 lakh in 10 years if prices rise 6% a year.
Purchasing power. Keep that same ₹1 lakh in a cupboard for 10 years at 6% inflation, and it will buy only about ₹55,839 worth of today's goods.
Monthly expenses. A household spending ₹50,000 a month today would need about ₹1.60 lakh a month to live the same way in 20 years at 6% inflation.
Your own inflation rate. If your child's school fee went from ₹1 lakh to ₹2 lakh over 7 years, it rose by about 10.41% a year, well above a 6% general rate.
A quick mental shortcut
To estimate how long prices take to double, divide 72 by the inflation rate. At 6% a year, prices double in roughly 12 years. You can check this with the calculator: ₹1 lakh at 6% for 12 years comes to just over ₹2 lakh. It is an approximation, but it is close enough to use in conversation, and it makes the long-term effect of inflation easy to picture.
Your inflation is personal
The official measure of inflation in India is the Consumer Price Index, published every month by the Ministry of Statistics and Programme Implementation. It tracks a broad basket of goods and services that represents an average household. Your household is not average. A family with children in private schools, a retired couple with rising medical bills, and a young single professional in a metro all spend on different things, and those things rise at different rates.
That is why the "rate behind a price rise" tool is useful. Check what your biggest expenses cost a few years ago: school fees, rent, insurance premiums, your monthly grocery bill. The rates you find tell you more about your own future costs than any national average.
Using inflation in your planning
- For goals: convert every goal into its future cost before deciding how much to invest. A ₹20 lakh college fund in today's money is a much bigger number by the time your child needs it.
- For retirement: your expenses keep rising after you stop working. The FIRE number calculator builds this in, with a separate, usually higher, rate for healthcare.
- For investments: a return only builds wealth to the extent it beats inflation. A fixed deposit earning less than your personal inflation rate loses real value even though the balance grows. The SIP calculator can show any result in today's rupees.
Limits of this calculator
It applies one steady rate every year. Real inflation moves around, with some years well above the average and some below. Use a range of rates for important decisions, and treat the results as estimates rather than forecasts.