Analysis Tool
Inflation Simulator
See how inflation erodes your purchasing power over time — adjust the sliders and watch the numbers update live.
Purchasing Power
You'll Need
Value Erosion
Purchasing Power Over Time
Year-by-Year Breakdown
| Year | To Match Today's ₹ | Purchasing Power of ₹ | Value Lost |
|---|
What Is an Inflation Calculator?
An inflation calculator (or inflation simulator) shows how rising prices erode the purchasing power of your money over time. If inflation averages 6% per year, something that costs ₹1 lakh today will cost approximately ₹3.2 lakh in 20 years. Meanwhile, ₹1 lakh kept in a savings account earning 3.5% interest will buy only a fraction of what it buys today.
This is the silent wealth destroyer that most Indians underestimate. Your salary may grow 8–10% annually, but if education costs rise 10–12% and medical expenses rise 12–15%, your real purchasing power is shrinking every year — even if your bank balance looks bigger.
This free inflation simulator lets you visualise exactly how inflation erodes your money over 5, 10, 20, or 30 years. Use it to plan realistic savings targets for retirement, your child's education, medical emergencies, or any long-term financial goal where future costs need to be estimated in today's rupees.
How to Use This Inflation Simulator
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1
Set the amount
Enter the amount in today's rupees — e.g. ₹1 crore for retirement, ₹50 lakh for education, or ₹50,000/month for living expenses. Use the preset buttons for quick access.
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2
Choose an inflation rate
Use 6% for general CPI inflation, 10% for education costs, 12% for medical expenses. India's CPI has averaged 5–7% over the last decade, but specific categories can run much higher.
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3
Set the time horizon
How many years into the future are you planning? For retirement at 60, enter (60 minus your current age). For a child's college at 18, enter (18 minus their current age).
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4
Read the results
The calculator shows the future cost (how much you'll actually need), the purchasing power erosion (how much today's money will be worth), and a year-by-year breakdown chart so you can see the compounding effect of inflation over time.
Inflation Rates in India — What to Use for Planning
General (CPI): 5–7%
India's Consumer Price Index inflation has averaged 5–7% over the last decade. RBI targets 4% (±2%). Use 6% as a conservative baseline for long-term financial planning.
Education: 10–12%
School and college fees in India have consistently risen 10–12% annually. IIT/IIM fees have more than doubled in the last decade. Engineering college that costs ₹10L today may cost ₹26L in 10 years at 10% inflation.
Medical: 12–15%
Healthcare costs in India have risen 12–15% annually in recent years. A surgery costing ₹5 lakh today could cost ₹15–20 lakh in 10 years. This is why adequate health insurance and a medical emergency fund are non-negotiable.
Housing & Rent: 5–8%
Rents in metro cities typically increase 5–8% annually, with tier-1 cities like Bangalore and Mumbai at the higher end. Property prices have a longer cycle but compound significantly over 15–20 years.
Fuel & Transport: 6–10%
Fuel prices, auto fares, and vehicle maintenance have risen 6–10% annually. If you're planning a car purchase 5 years from now, factor in at least 6% annual price inflation on the showroom cost.
Food: 6–8%
Food inflation in India is volatile — driven by monsoons, supply chains, and global commodity prices. The long-term average is 6–8%. Your monthly grocery bill of ₹15,000 today could be ₹27,000 in 10 years at 6% inflation.
How to Beat Inflation in India
The only way to protect your purchasing power is to invest in assets that consistently deliver returns above the inflation rate. Here's how common Indian investment options compare:
- Savings account (3.5–4%) — Loses to inflation every year. ₹1 lakh in a savings account for 20 years grows to ₹2 lakh but can only buy ₹62,000 worth of goods (at 6% inflation). You've lost ₹38,000 in real terms.
- Fixed deposits (6–7.5%) — Barely keeps pace with general inflation. After 30% tax on interest (for those in the highest bracket), the real return is often negative.
- PPF (7.1%) — Tax-free returns that marginally beat general inflation. Good for the safe portion of your portfolio, but won't outrun education or medical inflation.
- Equity mutual funds via SIP (10–14% historically) — The best long-term inflation-beater for Indian investors. A ₹10,000 SIP at 12% CAGR for 20 years grows to ₹1 crore — comfortably ahead of inflation.
- Real estate (varies by city) — Can beat inflation in high-growth locations but is illiquid, requires large capital, and maintenance costs add up.
- Gold (8–10% long-term in INR) — A good inflation hedge but volatile in the short term. Best held as 5–10% of your portfolio via Sovereign Gold Bonds (SGBs) for additional 2.5% annual interest.
The key insight: start early. Compounding works both ways — inflation compounds against you, but your investments compound in your favour. The earlier you start, the wider the gap between your wealth and inflation's erosion.
Factor inflation into your financial plan
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