See what today's money will cost in future — and how much purchasing power inflation quietly takes away over the years.
How inflation erodes money over time
Inflation is the steady rise in prices that makes the same rupee buy less each year. To find what something will cost in future, we grow today's price at the assumed inflation rate, compounded annually:
Future cost = Today's cost × (1 + inflation)years
Flip it around and the same maths tells you the purchasing power of today's money in future: divide today's amount by that same factor. Both views are shown above.
Worked example: ₹1,00,000 at 6% for 10 years
Something costing ₹1,00,000 today will cost about ₹1,79,085 (₹1.79 lakh) in 10 years at 6% inflation. Seen the other way, ₹1,00,000 held as idle cash will buy only ₹55,839 worth of today's goods after a decade — you lose roughly ₹44,161 of purchasing power simply by holding cash that doesn't grow.
Why this matters for your savings
The danger isn't just rising prices — it's savings that grow slower than prices. A fixed deposit paying 5% during 6% inflation loses 1% of real value every year, even though the rupee balance climbs. After tax, the gap widens further. To actually grow wealth, your returns must beat inflation after tax, which is the long-run argument for equity exposure. Compare a fixed deposit against an equity SIP with this lens.
Planning goals in future rupees
Big goals — a child's education, a home, retirement — must be planned in inflation-adjusted rupees, not today's. A ₹25 lakh degree today could cost far more by the time your child enrols, especially as education inflation often runs above headline CPI. Inflate the goal to its target year first, then work out the monthly investment needed using our compound interest and SIP calculators. (India CPI reference: roughly 4–7% in recent years; RBI target 4%.)
Frequently Asked Questions
How does this inflation calculator work?
It applies a constant annual inflation rate to today's amount: Future cost = Today × (1 + inflation)years. At 6% for 10 years, something costing ₹1,00,000 today will cost about ₹1,79,085. Equivalently, ₹1,00,000 held as idle cash will buy only ₹55,839 worth of today's goods — that erosion is the real cost of inflation.
What is a realistic inflation rate for India?
India's retail inflation (CPI) has broadly ranged 4–7% in recent years, with the RBI targeting 4% within a 2–6% band. We default the calculator to 6% as a cautious planning figure; education, healthcare and lifestyle costs often rise faster, while electronics can fall. Use a rate that matches the goal you are planning for.
What is purchasing power?
Purchasing power is how much your money can actually buy. Inflation reduces it over time: as prices rise, the same rupee buys less. ₹1,00,000 today has the purchasing power of only about ₹55,839 after 10 years of 6% inflation — the note is the same, but it commands fewer goods.
Why does inflation matter for my savings?
If your savings earn less than inflation, you are losing real wealth even though the rupee figure grows. A 5% fixed deposit during 6% inflation quietly shrinks your purchasing power. To protect and grow real wealth, your investments need to beat inflation after tax — which is the core case for equity exposure over long horizons. Compare growth options with our
SIP calculator.
How much will I need for retirement after inflation?
Take your desired annual expense in today's money and inflate it to your retirement year using the formula above. A ₹6,00,000-a-year lifestyle today becomes far larger in 20–30 years at 6% inflation, and it keeps rising through retirement. Always plan retirement targets in inflation-adjusted (future) rupees, not today's.
Does inflation affect loan EMIs?
Your EMI itself is fixed in rupees, so inflation gradually makes a fixed EMI feel lighter relative to a rising salary. But inflation also pushes central banks to raise interest rates, which lifts floating-rate EMIs on new and existing loans. See how rate changes hit repayments with our
home loan EMI calculator.
Estimates are for information and education only — not financial, tax or investment advice. Verify current rates and rules with official sources.