Inflation Calculator
Compare future costs and purchasing power under your inflation assumption.
Compare an investment return with inflation and open the yearly schedule.
Future cost under your inflation assumption
A constant-assumption illustration, not historical CPI data or an inflation forecast.
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Future price and future purchasing power are not the same number
Inflation changes what a given amount of money can buy. Future-cost mode estimates the later price of a purchase at a constant inflation assumption. Purchasing-power mode asks what unchanged cash will be worth in today's money after that same period. The investment comparison separately models money earning your assumed annual return.
Worked example
At 6% annual inflation, a Rs 1,00,000 purchase costs approximately Rs 1,79,085 after ten years. Meanwhile, Rs 1,00,000 held without interest buys roughly what Rs 55,839 buys today. The price increase is about 79.08%, while purchasing-power loss is about 44.16%; these percentages are not interchangeable.
Formula and calculation method
Future cost = cost today x (1 + inflation)^years; purchasing power = unchanged cash / (1 + inflation)^yearsAnnual inflation compounds over the entered duration, including fractional years. A negative inflation input models deflation. Future cost and purchasing power are reciprocal adjustments: they must not be calculated by adding or subtracting a simple percentage each year. The schedule includes year zero, each completed year and the final fractional year where applicable.
Interpretation and limitations
Real annual investment return equals (1 + nominal return) / (1 + inflation) - 1. With 8% return and 6% inflation, this is approximately 1.8868%, not exactly 2%. The investment scenario assumes a one-time initial amount, no additions and no taxes or fees. These are constant-rate illustrations, not historical CPI calculations, current inflation readings or forecasts.
Reference: Investor.gov: purchasing power.
Inflation Calculator: Frequently Asked Questions
What does an inflation calculator estimate?
It estimates how a constant inflation assumption changes prices and purchasing power over time. A future-cost calculation raises today's price, while a purchasing-power calculation discounts a fixed future amount into today's money.
How much could Rs 1 lakh cost after 10 years of inflation?
At an illustrative 6% annual inflation rate, something costing Rs 1 lakh today would cost about Rs 1,79,085 in 10 years. This is a scenario, not a prediction of Indian CPI or any particular household expense.
What is the formula for inflation-adjusted value?
Divide a future amount by (1 + annual inflation)^years. To estimate the future cost of a current expense, multiply by that factor instead. Use the inflation rate as a decimal in the formula.
Why are price increases and purchasing-power losses different percentages?
They use different denominators. If a price doubles, it has risen 100%, while the same unchanged cash buys half as much, a 50% loss in purchasing power. These percentages are not interchangeable.
How do I calculate a real investment return?
Divide (1 + nominal return) by (1 + inflation), then subtract 1. Simply subtracting inflation is an approximation. With 8% return and 6% inflation, the exact real annual return is about 1.89%.
More questions (5)
Can I use this for education or healthcare costs?
It can project a particular expense using a relevant assumed rate. Education or healthcare costs may not track general inflation. Their future rates are uncertain, so compare multiple assumptions rather than relying on one number.
Does this calculate historical rupee value from CPI?
No. This tool projects from your entered constant rate. It does not fetch historical consumer price indices or calculate capital-gains indexation using the Cost Inflation Index.
Is the default inflation rate the latest Indian CPI figure?
No. It is a manually editable scenario assumption. This page does not fetch CPI or claim to measure the current rate of inflation in India.
Can I model deflation?
Yes. A negative annual inflation assumption lowers projected future prices and increases the purchasing power of unchanged cash. It does not imply deflation will occur.
Does headline inflation match my household costs?
Not necessarily. Your spending mix, location and categories such as education, housing or healthcare may change differently. Use an assumption relevant to the cost being explored.