Inflation Calculator

What ₹1 lakh will not buy in ten years

₹1,00,000 today, at 6% inflation, needs to become ₹1,79,085 in ten years to buy the same things. Put the other way round, ₹1,00,000 kept under a mattress for a decade will have the purchasing power of about ₹55,840.

Nothing was stolen. The rupee figure never changed. What changed is what a rupee buys — which is why inflation is described as an erosion rather than a loss, and why it is the most consistently underestimated force in long-term financial planning.

Inflation is the rate at which the general price level rises. In India the headline measure is the Consumer Price Index, published monthly by the National Statistical Office, and the RBI operates a flexible inflation-targeting framework aiming for 4% with a tolerance band of 2% to 6%.

The two calculations

Future cost of something that costs X today:

Future value = Present value × (1 + r)ᵗ

1,00,000 × (1.06)¹⁰ = 1,00,000 × 1.79085 = ₹1,79,085

Today's purchasing power of a future sum:

Present value = Future value ÷ (1 + r)ᵗ

1,00,000 ÷ 1.79085 = ₹55,840

These are inverses of the same operation, and they answer different planning questions. The first tells you what a goal will cost when you reach it. The second tells you what a projected corpus is really worth.

Why real return is a division, not a subtraction

If an investment returns 9% while inflation runs 6%, the real return is not 3%. It is:

Real return = ((1 + nominal) ÷ (1 + inflation)) − 1

= (1.09 ÷ 1.06) − 1 = 2.83%

The subtraction approximation is close enough at low rates and drifts as rates rise. At 15% nominal and 10% inflation, subtraction gives 5% while the correct figure is 4.55%.

This is the calculation that reframes most savings decisions. A fixed deposit paying 7%, taxed at a 30% slab, nets about 4.9%. Against 6% inflation, the real return is −1.04% — the deposit lost purchasing power every year despite never losing a rupee. Safety of the nominal amount and preservation of real value are different things, and only one of them is guaranteed.

Where it matters most

Retirement planning. Monthly expenses of ₹50,000 today become roughly ₹2,87,000 in thirty years at 6%. Corpus targets built on today's expenses are understated by a factor of five or more.

Education costs. Education inflation in India has historically run well above headline CPI — frequently 8–10% — so a course costing ₹20 lakh today may cost ₹47 lakh in fifteen years.

Long-term goals generally. Any target more than five years away should be stated in future rupees, not today's.

Salary negotiation. A raise below the inflation rate is a real pay cut, whatever the letter says.

Reading the result

The figure applies one uniform rate to everything, which is a simplification. Your personal inflation rate depends on what you actually buy: healthcare and education have consistently outpaced headline CPI, while electronics and telecom have often fallen in real terms. A household spending heavily on school fees and medical care experiences materially higher inflation than the published index.

For planning, 6% is a reasonable general assumption for India — above the RBI's 4% target, reflecting the historical average and providing a margin of safety. For education or healthcare goals specifically, model 8–10%.

Common mistakes

Subtracting inflation from returns. Divide instead; the difference grows with the rates involved.

Planning retirement on today's expenses. Thirty years of 6% multiplies costs by 5.7.

Assuming a guaranteed return is a safe return. A deposit that reliably loses 1% of purchasing power a year is safe in nominal terms and quietly destructive in real ones.

Using headline CPI for every goal. Education and healthcare run well above it.

Ignoring inflation on a maturity projection. Any long-horizon corpus figure should be discounted back before it is judged adequate.