Inflation Calculator – Calculate Future Cost of Living & Purchasing Power Decay

Inflation is the rate at which the general level of prices for goods and services rises over time, eroding the purchasing power of your money. If an item costs ₹100 today, with 6% annual inflation, that same item will cost ₹106 next year.

Historically, consumer price index (CPI) inflation in India averages around 5.5% to 6.5% per annum. However, specific sectors like Healthcare and Higher Education experience much higher inflation rates of 10% to 12% annually.

The Rule of 70 is a simple mental formula to calculate how many years it will take for prices to double at a given inflation rate. Divide 70 by the annual inflation rate (e.g. at 6% inflation, 70 / 6 = 11.66 years for prices to double).

Nominal value is the face amount of currency (e.g. ₹10 Lakhs in your bank). Real purchasing power is what that money can actually buy after adjusting for inflation over time.

To beat inflation, investments must earn an after-tax rate of return higher than the inflation rate. Equity Mutual Funds, Nifty Index Funds (12%-14% CAGR), and Real Estate historically generate positive "Real Alpha" above the 6% inflation benchmark.

A fixed deposit earning 6.5% interest with 30% tax bracket yields a post-tax return of only 4.55%. If inflation is 6%, your real purchasing power actually shrinks by -1.45% every year.