What is the Inflation?
Inflation is the yearly rise in prices — and the silent fall in what each rupee buys. India’s consumer inflation has averaged around 5–6% over the last two decades, with education and healthcare inflating far faster (8–10%).
The consequences are brutal for long-term planning: a ₹1 lakh monthly lifestyle today needs ₹2.4 lakh in 15 years at 6% inflation. A ₹25 lakh engineering degree becomes ₹58 lakh by the time a toddler reaches college. Every financial goal must be planned in future rupees — this calculator converts for you.
Formula & worked example
Worked example: at 6% inflation for 15 years, a ₹1,00,000 expense becomes 1,00,000 × (1.06)15 ≈ ₹2,39,656; and ₹1,00,000 kept as cash will buy only what ₹41,727 buys today — a 58% loss of purchasing power for money left idle.
How to use this inflation calculator
- Enter any amount — a monthly budget, school fee, wedding cost or retirement expense.
- Set the inflation rate: 6% general, 8–10% for education/medical, 4–5% conservative.
- Choose the years to your goal, then feed the future cost into our SIP or Goal calculators to plan the saving.
Smart tips
- Any money parked below the inflation rate (savings accounts at 3%) is losing value every single day.
- Plan long-term goals with category-specific inflation: education 8–10%, healthcare 10%, weddings 7–8%.
- Salary check: if your annual increment is below inflation, you got a real pay cut — negotiate with that number.
- Retirement math must use inflated expenses: ₹50,000/month today is ₹1.6 lakh/month in 20 years at 6%.
- Beat inflation with real returns — equity (12% vs 6% inflation = +6% real) grows wealth; cash guarantees loss.
Frequently asked questions
What inflation rate should I use for India?
For general planning, 6% is the standard long-run assumption (RBI targets 4% ±2%). Use 8–10% for education and healthcare goals, which consistently outpace CPI.
How fast does money lose value at 6% inflation?
Prices double roughly every 12 years (72 ÷ 6). Equivalently, cash loses about half its purchasing power every 12 years if it earns nothing.
What is a "real" return?
Your return minus inflation. A 7% FD during 6% inflation earns ~1% real — before tax, often negative after tax. A 12% equity return in the same environment earns ~5.7% real. Real returns are what actually grow wealth.
How do I inflation-proof my savings?
Match assets to horizons: equity funds and index funds for long-term (historically 5–7% above inflation), EPF/PPF and quality debt around inflation for stability, and keep only the emergency fund in near-cash.
Why do my expenses rise faster than official inflation?
CPI is a national average basket. Urban lifestyles weight education, rent, dining and healthcare — categories inflating faster. Tracking your own expenses for a year gives your personal inflation rate, usually 1–3% above CPI.
Want the theory behind the numbers? Read our money basics guides on the Money Blog.