Tools To India

Inflation Calculator

Enter an amount and an inflation rate to see what the same thing will cost in future, and what today’s money will actually be worth by then.

Last updated

₹1 Lakh

India’s inflation target is set with a tolerance band around 4%. Personal inflation on education and healthcare is often higher.

The result updates as you type. Nothing you enter is saved, sent to a server or shared.

What it will cost in 20 years

₹3,20,714

₹2,20,714 more than today, at 6% inflation

Rising costs

Cost today
₹1,00,000
Cost in 20 years
₹3,20,714
Increase
₹2,20,714

Falling purchasing power

What ₹1,00,000 will buy in 20 yearsIn today’s money.
₹31,180
Purchasing power lost
−₹68,820
  • This uses a single constant inflation rate. Real inflation varies year to year and differs sharply by category — education and healthcare have typically risen faster than the headline index.

How this calculator works

Inflation is the rate at which money loses purchasing power. It is measured in India by the Consumer Price Index, and the monetary policy framework sets an inflation target with a tolerance band around it.

The calculation runs in both directions, because they answer different questions. Multiplying by (1 + rate) each year tells you what something will cost. Dividing instead tells you what today’s money will be worth. The first matters when planning a future expense; the second matters when judging whether a long-term investment is actually growing.

The compounding is the part that surprises people. At 6%, prices roughly double every twelve years. A ₹50 lakh house today would cost about ₹1.6 crore in twenty years, and ₹1 lakh today would buy about ₹31,000 worth of goods by then.

This is why the real return on an investment matters far more than the nominal one. A fixed deposit earning 7% while inflation runs at 6% is preserving purchasing power, not building wealth — and once tax is deducted from the 7%, it may not even do that.

The formula

Future cost

Future cost = present cost × (1 + inflation)ⁿ

Future purchasing power of today’s money

Future value in today’s money = amount ÷ (1 + inflation)ⁿ

Real return on an investment

Real return ≈ ((1 + nominal) ÷ (1 + inflation) − 1) × 100

Subtracting inflation from the nominal return is a close approximation at low rates. This formula is exact.

Worked example: ₹1 lakh at 6% inflation over 20 years

Consider an expense of ₹1,00,000 today and 6% average annual inflation over twenty years.

Step-by-step calculation for the worked example
Cost today₹1,00,000
Inflation factor (1.06)²⁰3.2071
Cost in 20 years₹3,20,714
Increase₹2,20,714
What ₹1,00,000 will buy in 20 years₹31,180
Purchasing power lost₹68,820

Prices more than triple while the same rupees buy less than a third as much. A deposit earning 7% over the same period would grow ₹1 lakh to about ₹3.87 lakh — ahead of inflation before tax, and roughly level with it afterwards for someone in a high bracket.

Things worth knowing

  • A single constant rate is a simplification. Real inflation fluctuates and varies sharply by category — education and healthcare have historically risen faster than the headline index.
  • Your personal inflation rate depends on what you actually spend on. Someone paying school fees and medical bills experiences higher inflation than the published number suggests.
  • When planning a long-term goal, inflate the target first, then work out what you need to invest. Planning for today’s cost of a goal twenty years away almost guarantees a shortfall.
  • Compare investments on real returns after tax, not nominal returns. A 7% deposit taxed at 30% returns about 4.9%, which is below a 6% inflation rate.
  • Salary increments need to beat inflation before they represent a real raise. A 5% increment in a 6% inflation year is a pay cut in purchasing power.

Frequently asked questions

What inflation rate should I assume for planning?
India’s monetary policy framework targets consumer price inflation at 4% with a tolerance band of two percentage points either side. Many people plan long-term goals at 6% to stay conservative, and use a higher figure for education and healthcare, which have historically risen faster.
How does inflation affect my savings?
It erodes what they can buy. If your savings earn 6% while inflation runs at 6%, the balance grows but your purchasing power stays flat — and after tax on the interest, it falls. This is why holding long-term money entirely in low-yield deposits tends to lose ground quietly over decades.
What is the difference between nominal and real return?
Nominal return is the headline percentage. Real return is what is left after inflation, and it is the only one that tells you whether you can afford more than before. An investment returning 10% during 6% inflation has a real return of roughly 3.8%.
Does inflation affect loans too?
Yes, and in the borrower’s favour on a fixed-rate loan. You repay in rupees that are worth less than the ones you borrowed. This is one reason long-term fixed-rate debt is less punishing in real terms than the nominal interest figure suggests — though most Indian home loans are floating rather than fixed.

Sources

Every figure on this page is traceable to the official source below. If a source has changed since the date shown, please tell us and we will correct it.