What Does Inflation Do to Your Money?

Inflation raises prices over time, which means every rupee you hold buys a little less each year. The calculator uses a simple formula: future cost equals today's cost multiplied by (1 + inflation)^years. At 5% inflation, today's ₹50,000 monthly household budget becomes ₹82,000 in 10 years and ₹1.33 lakh in 20. Put the other way around, ₹10 lakh kept as idle cash for 20 years will only buy what ₹3.77 lakh buys today.

Where Does India's Inflation Stand?

Consumer price inflation was 3.93% year on year in May 2026, on the new 2024-base series, after an unusually soft FY 2025-26 in which October 2025 touched a record low of 0.25%, helped by food prices and the GST rate cuts. The RBI targets 4% with a two-percent band either side, and projects around 5.1% for FY 2026-27. For long-term planning, most people assume 5% to 6%, and it is wise to assume more for education and healthcare, which persistently inflate faster than the headline number.

How to Use This Calculator in Real Decisions

Three uses come up constantly. First, deflate your returns: a 6.5% FD against 5% inflation is only a 1.4% real return before tax, and close to zero after. Second, inflate your goals: a ₹20 lakh education bill 15 years away at 8% education inflation is actually a ₹63 lakh target, and once you know that you can size the monthly saving with the SIP calculator. Third, retirement: always plan in inflated rupees, which the retirement calculator does automatically.

Why Small Differences in the Rate Matter So Much

Over decades, the gap between "a little" inflation and "a bit more" becomes enormous. Matching ₹1 lakh of today's purchasing power in 20 years requires ₹1.81 lakh at 3% inflation, ₹2.65 lakh at 5%, ₹3.87 lakh at 7%, and ₹6.73 lakh at 10%. The category matters as much as the average. School fees and hospital bills in India have inflated at 8% to 10% or more, while manufactured goods have often inflated below the CPI. Your household's true inflation depends on what your household actually buys.

How to Protect Yourself

Cash and savings accounts lose to inflation by design, so hold only your working buffer there. Guaranteed instruments roughly keep pace after tax: they preserve purchasing power but rarely grow it. Equity and business ownership have historically beaten inflation over long horizons, at the price of volatility along the way. And one everyday use: a salary increment below inflation is a real pay cut. This calculator turns any offer into real terms in seconds.

FAQs about Inflation Calculator

CPI inflation was 3.93% year-on-year in May 2026 (new 2024=100 base series). FY 2025-26 was unusually low (October 2025 hit a record 0.25%), and the RBI projects about 5.1% for FY 2026-27 against its 4% target.
For long horizons, 5–6% is a prudent assumption for general expenses; use 7–10% for education and healthcare, which historically outpace CPI. Better slightly high than caught short.
Return after inflation: approximately nominal return minus inflation (exactly, (1+nominal)/(1+inflation) − 1). A 12% equity return at 5% inflation is a ~6.7% real return; a 6% FD is ~1% real, before tax.
Any future goal must be inflated to the year you need it: multiply today's cost by (1+inflation)^years. Skipping this step is the most common reason savings targets fall short.
CPI weights a national consumption basket; urban households heavy on education, healthcare, rent and services experience those categories' higher inflation. Budgeting with your own expense growth over the past few years beats using the headline number.
Yes — it is a pay cut in real terms. A 4% increment during 6% inflation shrinks your purchasing power ~2% a year; over a five-year stretch that compounds to roughly a 10% real decline. Benchmark increments against your personal inflation, not zero.