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Inflation Calculator

What today's money will be worth later, and how much you will need to keep the same purchasing power.

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Quick answer

At 6% inflation, ₹1,00,000 today has the buying power of about ₹49,700 in 12 years, prices double roughly every 72 ÷ inflation-rate years. Any return below inflation is a loss wearing a disguise.

Buying power in 12 years
₹49,697
What today’s amount will actually buy.
Needed to keep pace
₹2,01,220
The future amount with the same buying power.
Prices double every
≈ 12.0 years
The rule of 72.

Formulas last verified 2026-10-10. Results are estimates, not financial advice. How we calculate.

Compounding, pointed at you

Inflation is compound interest running against your money. The formula is the familiar one inverted:

purchasing power = amount / (1 + inflation)^years

At 6% inflation, ₹1,00,000 becomes, in what it can buy, about ₹49,697 after 12 years. Nothing was spent, nothing was lost to fees; prices simply doubled around a static number. The rule of 72 gives the shortcut: 72 ÷ 6 = 12 years per doubling of prices, which is the same thing as a halving of purchasing power.

The erosion table

What ₹1,00,000 of today's purchasing power looks like over time, by inflation rate:

Years4% inflation6% inflation8% inflation
5₹82,193₹74,726₹68,058
12₹62,460₹49,697₹39,711
20₹45,639₹31,180₹21,455
30₹30,832₹17,411₹9,938

The 30-year row is the retirement-planning row: at 6% inflation, money parked in cash for a working lifetime keeps about a sixth of its buying power. This is why "safe" is the wrong word for cash over decades, it is safe from volatility and defenceless against inflation.

Real vs nominal: the only return that counts

Every quoted rate is nominal. The return that changes your life is real:

real return ≈ nominal return − inflation

(The exact form divides rather than subtracts, but the approximation is fine below ~10%.) A 7% fixed deposit during 6% inflation is a 1% real return, your wealth is nearly standing still while the account statement climbs. An equity return of 11% in the same environment is 5% real. Judge every investment this way, and the compound interest calculator run at the real rate shows your genuine trajectory.

Planning forward: inflate the target

The formula runs both directions. A goal that costs ₹25 lakh today, a wedding, an education, will cost ₹25 lakh × (1.06)^10 ≈ ₹44.8 lakh in ten years at 6% inflation. Set the future figure as the target, not the present one. Education deserves particular caution: fee inflation has historically outrun headline CPI, so 8–10% is a defensible assumption there even when general inflation is 6%.

What to actually do about it

  • Keep cash for its job, emergencies and goals within ~3 years. The savings goal calculator covers that horizon, where inflation has little time to bite.
  • Move long-horizon money into growth assets, a monthly plan via the SIP calculator is the standard route; equity has been the reliable long-run inflation-beater, at the price of a rough ride.
  • Measure past investments honestly, the CAGR calculator gives the nominal annual rate; subtract inflation before congratulating yourself.
  • Revisit assumptions, inflation is not constant. Rerun plans when the environment shifts; a plan built on 4% breaks quietly in a 7% decade.

Frequently asked questions

How does the inflation calculation work?

Future purchasing power = amount ÷ (1 + inflation rate)^years. At 6% inflation, ₹1,00,000 today buys what about ₹49,697 buys in 12 years, its purchasing power roughly halves. Run forward instead, the same formula says you will need about ₹2,01,220 in 12 years to buy what ₹1,00,000 buys now. Same arithmetic, two directions.

How fast do prices double?

The rule of 72: doubling time ≈ 72 ÷ inflation rate. At 6%, prices double roughly every 12 years; at 4%, every 18; at 8%, every 9. It is the compound-interest rule of thumb pointed the other way, the same mechanism that grows investments is here growing the price of everything you buy.

What is the difference between real and nominal returns?

Nominal is the quoted rate; real is what is left after inflation. The precise relation is real = (1 + nominal) ÷ (1 + inflation) − 1, though nominal minus inflation is close enough for planning. A 7% FD during 6% inflation earns roughly 1% real, and if the interest is taxed, the real, after-tax return can quietly go negative.

Is money in a savings account losing value?

If the account rate is below inflation, yes, the balance grows while its buying power shrinks. Cash at 3% during 6% inflation loses about 3% of purchasing power a year, roughly 26% over a decade. That does not make savings accounts wrong: they are for emergency funds and near-term goals, where losing a few percent to inflation beats risking 30% to a market drop.

What inflation rate should I use for planning?

A long-run average for your country, not last month’s headline. India’s CPI has averaged in the 5–6% range over recent decades; the US closer to 2–3%. Personal inflation can differ from the official basket, education and healthcare have historically outrun headline CPI in both countries, so goals in those categories deserve a higher assumption.

How do I protect savings from inflation?

Own things whose returns have historically beaten inflation over long periods, broad equity funds are the standard answer, with real (after-inflation) returns of roughly 5–7% over multi-decade stretches. The trade is volatility: the inflation-beating assets are the bumpy ones. The practical split is cash for the next few years of needs, growth assets for everything further out.

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