What is inflation?
Inflation is the steady rise in prices over time. A plate of food, a school fee or a hospital bill that costs a certain amount today will usually cost more in a few years. When prices rise, each rupee you hold buys a little less.
Even modest inflation adds up. At 6% a year, prices roughly double every 12 years.
How to use this inflation calculator
- Cost today: the price of something now, or an amount of money.
- Inflation per year: the rate you expect prices to rise.
- Years from now: how far ahead to look.
You’ll see what that cost could become, and what the same amount of money would be worth in today’s terms.
The formula
Future cost = Today’s cost × (1 + inflation)ⁿ
Today’s value of future money = Amount ÷ (1 + inflation)ⁿ
where n is the number of years.
A worked example
Something that costs ₹1,00,000 today, with 6% inflation, in 20 years:
- It could cost about ₹3,20,714
- ₹1,00,000 then would buy only what about ₹31,180 buys today
Why inflation matters for your goals
- Goals cost more than you think. A ₹20 lakh education goal 12 years away could need about ₹40 lakh. Plan for the future price with the goal SIP calculator.
- Retirement lasts decades. Your expenses keep rising after you retire too. The retirement calculator builds this in.
- “Safe” can still lose. If a deposit earns 7% before tax and inflation is 6%, your real growth after tax may be close to zero, or even negative.
- Real return is what counts. Roughly, real return ≈ your return minus inflation. A 12% return with 6% inflation is about 6% of real growth.
Staying ahead of inflation
Over long periods, a portfolio with a sensible share of equity has historically had a better chance of beating inflation than deposits alone, though it goes up and down along the way. A Bridgit expert can build a mix of equity, debt and gold around your goals, and adjust it as your plans change. See what regular investing could build with the SIP calculator.
