Inflation Calculator
See how inflation erodes your money's purchasing power over time. Calculate the future cost of goods and plan your investments accordingly.
📉Inflation Details
⚠️ Purchasing Power Lost
68.8%
in 20 years at 6% inflation
Today's ₹100,000 will feel like
₹31.2K
in 20 years
You'll need
₹3.21 L
to buy the same things
Inflation's Impact Over Time
How the Inflation Calculator Works
What Inflation Actually Does to Your Money
Inflation is the rate at which prices of goods and services rise over time. It's measured monthly by statistics agencies (CPI in most countries) and expressed as an annual percentage. When inflation is 6%, it means a basket of goods that cost ₹100 last year costs ₹106 today.
The effect on your money is subtle but relentless. If you hold ₹1,00,000 in a savings account earning 3% while inflation runs at 6%, you're losing 3% of purchasing power every year. After 20 years, your ₹1,00,000 will have grown to ₹1,80,000 nominally — but it will only buy what ₹56,000 buys today. That's a 44% loss of real wealth, even though your bank balance shows a positive return.
This is the hidden tax of inflation. It doesn't show up on any statement, but it silently erodes wealth. The only way to protect against it is to invest in assets that grow faster than inflation — historically, equity has been the most reliable long-term option.
Inflation Rates Around the World
Inflation varies significantly by country. Recent rates (2026 averages): India ~5–6%, US ~3%, UK ~3–4%, Australia ~3–4%, Eurozone ~2.5%. These rates fluctuate based on monetary policy, commodity prices, and economic growth.
Emerging markets typically have higher inflation than developed markets. India's 6% average inflation reflects its faster-growing economy and currency dynamics. The US Federal Reserve targets 2% inflation; the RBI targets 4% (±2%).
The 1970s saw the worst inflation in modern developed-world history: US inflation reached 14.8% in 1980. This era is why central banks now have explicit inflation targets and aggressive tools to keep it in check.
The Rule of 72 for Inflation
The Rule of 72 gives a quick estimate of how long it takes for prices to double at a given inflation rate. Divide 72 by the inflation rate. At 6% inflation (India), prices double every 12 years. At 3% inflation (US), every 24 years. At 4% (UK), every 18 years.
This means something costing ₹1,00,000 today will cost ₹2,00,000 in 12 years at 6% inflation. In 24 years, ₹4,00,000. In 36 years, ₹8,00,000. Your salary needs to grow at least as fast as inflation just to maintain your standard of living.
This is why retirement planning is so challenging. Your expenses at retirement will be significantly higher than today. A ₹50,000/month lifestyle today becomes ₹1,60,000/month in 20 years at 6% inflation. Your retirement corpus must account for this.
Step-by-Step Worked Example
You have ₹10,00,000 today and want to know what it will be worth in 20 years at 6% inflation, and how much you'd need to buy the same things.
- 1Current amount: ₹10,00,000.
- 2Inflation rate: 6% per year.
- 3Time period: 20 years.
- 4Future cost equivalent = ₹10,00,000 × (1.06)^20 = ₹32,07,135.
- 5Real value of today's amount = ₹10,00,000 / (1.06)^20 = ₹3,11,805.
- 6Purchasing power lost = (₹10,00,000 − ₹3,11,805) / ₹10,00,000 = 68.8%.
Result
Today's ₹10,00,000 in 20 years at 6% inflation:
— Nominal value: still ₹10,00,000
— Real purchasing power: ₹3,11,805
— You'll need ₹32,07,135 to buy what ₹10,00,000 buys today
Loss of purchasing power: 68.8%
This is why keeping money in a savings account at 3% interest loses real wealth. To maintain purchasing power, you need investments yielding 6%+ (post-tax).
Key Benefits & Use Cases
When to Use This Tool
- ✓Understanding the real value of your savings over time.
- ✓Planning future expenses (retirement, education, marriage) with inflation adjustment.
- ✓Comparing investment options on their real (post-inflation) returns.
- ✓Explaining why saving in a bank account loses purchasing power.
- ✓Teaching the difference between nominal and real returns.
Why It Matters
- →Multi-country presets for quick comparisons across different inflation regimes.
- →Visual chart clearly shows the growing gap between cost and purchasing power.
- →Reveals the hidden erosion of savings that bank statements don't show.
- →Works for any currency and any inflation assumption.
- →Free, no signup, works on any device.
Who Should Use This Calculator
- ★Anyone planning long-term goals (10+ years) that require future cost estimation.
- ★Investors evaluating whether their portfolio is beating inflation.
- ★Retirees understanding how their fixed income loses real value over time.
- ★Financial planners modelling future expenses for clients.
Purchasing Power
See how much your money will actually be worth in future years.
Country Presets
Quick presets for India, US, UK, and Australia inflation rates.
Visual Impact
Chart showing the growing gap between nominal and real value.
How to Use
Enter Amount
Set the amount you want to check against inflation.
Set Inflation Rate
Use country presets or enter a custom inflation rate.
Choose Period
Select how many years into the future.
See the Impact
View purchasing power loss and future cost equivalent.
The Formula
Future Value = Present Value × (1 + inflation)^yearsFrequently Asked Questions
What is inflation?
Inflation is the rate at which prices increase over time, reducing the purchasing power of money. If inflation is 6%, something costing ₹100 today will cost ₹106 next year. Inflation averages 5–6% in India, 3% in the US, 3–4% in the UK, and 3–4% in Australia.
How does inflation affect my savings?
If your savings earn less than the inflation rate, you're actually losing money in real terms. Your bank account balance grows, but it buys less. This is called 'inflation risk' — the silent erosion of wealth that doesn't show on bank statements.
What is the current inflation rate?
India: ~5–6%, US: ~3%, UK: ~3–4%, Australia: ~3–4% (as of 2026). Rates vary and are updated monthly by each country's statistics bureau (RBI, BLS, ONS, ABS).
How do I beat inflation?
Invest in assets that grow faster than inflation: equity (10–12% historical), real estate, equity mutual funds. Bank savings accounts (3–4%) typically lose to inflation. The goal is to earn real returns — nominal returns minus inflation — above zero.
What is real return vs nominal return?
Nominal return is your raw investment return (e.g., 12%). Real return is nominal return minus inflation (e.g., 12% − 6% = 6% real return). Always think in real returns — they tell you whether your wealth is actually growing.
Why do central banks target 2% inflation?
Most developed-country central banks target ~2% inflation. Too low (deflation) can cause economic stagnation; too high erodes purchasing power. 2% is seen as a healthy balance that encourages spending without destroying savings. The RBI targets 4% (±2%) for India.
Does inflation affect all goods equally?
No. Different categories have different inflation rates. Education and healthcare inflate faster (8–10% in India) than general CPI. Food and fuel are volatile. This is why education cost calculators assume higher inflation than general inflation.
What is hyperinflation?
Hyperinflation is very rapid inflation (typically 50%+ per month). Historical examples: Weimar Germany (1923), Zimbabwe (2008), Venezuela (2018). Hyperinflation destroys savings overnight and cripples economies. No major economy has experienced this in modern times.
Reviewed by AutoWealthLab Editorial Team
This calculator and its accompanying guide are maintained by the AutoWealthLab editorial team. Every formula is verified against standard financial references, and results are cross-checked with independent calculators before publishing. Our tools are updated whenever tax rules, interest rate benchmarks, or regulatory formulas change.
Last reviewed: October 2026 · Methodology: Standard amortization and compound interest models · Learn more about our testing process