Inflation & Purchasing Power Calculator
See how inflation erodes the future purchasing power of your savings, or estimate the future cost of an item.
Inflation Projections
Understand the future value of your money adjusted for inflation:
Future Cost
The higher budget needed in the future to purchase the same basket of goods.
Purchasing Power Left
The relative purchasing power value of your cash capital over the period.
Net Loss
The total value eroded from your savings if they are not invested in inflation-beating assets.
How is it calculated?
FV = PV \times (1 + i)^n \quad | \quad PV = \frac{FV}{(1 + i)^n}Where FV is future cost, PV is present cost, i is annual inflation rate, and n is number of years.
Worked Examples
₹10,000 Expense in 20 Years at 6% Inflation
Due to the compound compounding rate of inflation, a monthly budget of ₹10,000 today will require ₹32,071 in 20 years just to buy the exact same goods.
Purchasing Power Loss
At a 6% inflation rate, ₹1 Lakh cash stored in a locker will only have the purchasing power of ₹55,839 in 10 years.
Inflation and Future Cost Projection Guide
What is Inflation?
Inflation is the general increase in prices and fall in the purchasing power of money over time. As inflation rises, every rupee or dollar you save buys a smaller percentage of a good or service.
Understanding inflation is vital because if your investments do not yield returns higher than the rate of inflation, you are effectively losing wealth in terms of real purchasing power.
How Inflation Erodes Savings over Time
The cost of goods under inflation compounds similarly to interest:
Future Cost = Current Cost * (1 + Inflation_Rate)^Years
At a steady 6% annual inflation rate, the cost of living doubles approximately every 12 years, meaning a ₹10,00,000 salary today will only have the purchasing power of ₹5,00,000 in 12 years.
Frequently Asked Questions
Which investment classes are best for beating inflation?
What is the difference between nominal and real interest rates?
Results are estimates and should not be considered financial advice.