Inflation is the silent killer of your savings. What costs ₹1 today will cost much more in 10 or 20 years due to inflation. Simply saving money isn't enough - you need to make sure your investments grow faster than inflation, otherwise you're actually losing purchasing power over time. Our inflation calculator helps you understand how prices will increase in the future and what you need to do to maintain your standard of living.
For FY 2025-26, historical inflation in India has been around 6-7% per year on average. This means if something costs ₹100 today, it will cost ₹106-107 next year, ₹112-114 in two years, and so on. Over 20 years, ₹10,000 becomes worth only ₹3,000 in today's purchasing power if you just keep it in a savings account. That's why experts recommend investing in assets that beat inflation - like equity mutual funds through SIPs (which can give 10-12% returns), PPF (7-8% tax-free), and NPS (10-12% with tax benefits).
The inflation impact is especially critical for long-term goals like retirement. If you're planning to retire in 20 years and need ₹50,000 per month today, you'll actually need ₹2-3 lakh per month then just to have the same lifestyle. That's why tools like retirement calculator and inflation calculator go hand in hand - you can't plan future finances without accounting for inflation. Even fixed deposits and bonds usually give returns close to or slightly above inflation, but after tax, real returns become negative.
Many people compare FD returns and think they're making money, but when you factor in inflation and tax, the real returns are often negative. This is why financial advisors recommend a mix of debt (for safety) and equity (for growth) in your portfolio. Understanding inflation helps you make better decisions about where to invest and how much you need to accumulate for future goals.
For historical inflation data and predictions, check the Reserve Bank of India's website at RBI inflation reports which publishes CPI (Consumer Price Index) data every month and helps you understand how prices are changing in India.
| Period | Inflation Rate | Impact |
|---|---|---|
| 2024-25 (Current) | 4-6% | Moderate |
| Historical Average | 6-8% | High |
| Target Rate (RBI) | 4% | Optimal |
Inflation is the rate at which prices of goods and services increase over time. It reduces the purchasing power of your money, meaning the same amount will buy fewer goods in the future.
The current inflation rate in India is around 4-6% annually. The Reserve Bank of India targets 4% inflation, but it can vary based on economic conditions.
Invest in assets that historically beat inflation like equity mutual funds, real estate, gold, and other growth-oriented investments. Avoid keeping large amounts in low-yield savings accounts.
Yes, absolutely. Inflation significantly impacts retirement planning. You need to account for inflation to ensure your retirement corpus maintains its purchasing power.
Nominal returns are the actual returns you earn, while real returns are nominal returns minus inflation. Real returns show your actual purchasing power gain.
Review your investments annually and ensure they're generating returns above the inflation rate. Adjust your portfolio if needed to maintain real value growth.