Inflation is the rate at which the general level of prices rises over time, reducing the purchasing power of money. At 6% inflation, something costing ₹100 today will cost ₹179 in 10 years.

What is India's average inflation rate?

India's CPI (Consumer Price Index) inflation has averaged around 5–7% over the last decade. RBI targets 4% inflation (±2% tolerance band). Food inflation is often higher than headline inflation.

How does inflation affect savings?

If your savings earn less than the inflation rate, you are losing real purchasing power even while the nominal balance grows. For example, 4% FD return minus 6% inflation = -2% real return.

How can I beat inflation?

Investments in equity (mutual funds, stocks) historically return 12–15% p.a. in India, well above inflation. PPF at 7.1% and NPS equity funds at 10–12% also help preserve purchasing power better than savings accounts.

Which assets best protect against inflation in India?

Historically in India: Real estate has tracked or beaten inflation in most cities (7-10% CAGR). Gold has averaged 10-12% CAGR over 20 years, closely tracking inflation. Equity (Nifty 50) has delivered 12-15% CAGR, significantly outpacing 6% average inflation. FDs and savings accounts often barely keep pace with inflation after tax - a 7% FD in the 30% slab earns only 4.9% post-tax. PPF at 7.1% is tax-free and often beats post-tax FD returns. Investing only in FDs means losing purchasing power over 15-20 years.

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Inflation Calculator

See how inflation erodes your money's purchasing power over time. Find out how much you'll need in the future to match today's value.

Current Amount

₹1,000₹1.00 Cr

Inflation Rate (% p.a.)

1.0%15.0%

Time Period (Years)

1 yr40 yrs

Amount Needed in 10 Yrs

₹1.79 L

Purchasing Power Left

55.8%

Inflation Impact

₹79,085

Today's ₹₹1.00 L Worth

₹55,839

Purchasing power erosion over 10 years

Purchasing Power Erosion

Year	Amount Needed	Purchasing Power
Now	₹1.00 L	100.0%
Year 5	₹1.34 L	74.7%
Year 10	₹1.79 L	55.8%

Illustrative only. Actual inflation varies. RBI targets 4% CPI inflation over the medium term.

About the Inflation Calculator

Inflation erodes the purchasing power of money over time. ₹1,00,000 today will buy significantly less in 10 years due to rising prices. India's CPI (Consumer Price Index) inflation has averaged around 5–6% annually over the past decade, peaking above 8% in 2022–23 due to global factors. Understanding inflation is essential for long-term financial planning - especially for retirement.

Inflation-Adjusted Value

Future Value = Present Value × (1 + inflation rate)^years

To find present value of a future sum: PV = FV / (1 + r)^t · Real return = ((1 + nominal return) / (1 + inflation)) − 1

Worked Example

Monthly expenses of ₹50,000 today - what will they cost in 20 years at 6% inflation?

Current Monthly Expenses:₹50,000

Inflation Rate:6% p.a.

Years:20

Future monthly expenses ≈ ₹1,60,357 · You'll need 3.2× more income just to maintain the same lifestyle

Tips & Insights

1
Your investments must beat inflation to grow your real wealth - FDs at 7% with 6% inflation give only 0.94% real return.
2
Food and healthcare inflation in India has historically been higher than headline CPI - budget accordingly for these categories.
3
Use 6% as a conservative inflation estimate for general planning, 8% for healthcare, and 10% for education costs.
4
Equity mutual funds have historically delivered 10–15% returns in India - well above the 6% average inflation.
5
Retirement corpus planning must account for 25–30 years of inflation, meaning you need 4–5× your current annual expenses.

Why this matters for you

A retirement corpus that seems large today may be inadequate in 20 years. At 6% inflation, ₹1 crore becomes worth only ₹31 lakh in real terms after 20 years. This is why financial planners insist on inflation-adjusted retirement planning - and why equity investments (not FDs) are necessary for long-term goals.